Burgess v Aspen Living Villages Pty Limited ACN 114 904 415

[2024] NSWCATCD 65

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Burgess v Aspen Living Villages Pty Limited ACN 114 904 415 [2024] NSWCATCD 65

Hearing dates:

24 September 2024

Date of orders:

17 October 2024

Decision date:

17 October 2024

Jurisdiction:

Consumer and Commercial Division

Before:

Senior Member S. A. McDonald

Decision:

The Tribunal declares that:

1     The site fee increase contained in the Respondent’s Notice dated 11 March 2024 to Peter & Leanna Burgess of Rosedale NSW 2537 NSW 2251 for the period commencing 15 May 2024 (Notice) is excessive;

2      Any increase in site fees determined by notice by the Respondent for the period 15 May 2024 – 14 May 2025 must not exceed a 3.5% increase on the site fees levied in the period immediately prior to 15 May 2024 in respect of the 22 applicants to these proceedings.

The Tribunal orders that:

1     The Notice and any similar notices dated on or about 11 March 2024 issued to the 22 applicants in these proceedings and relevant to site fees payable on or after 15 May 2024 should be set aside;

2      The Respondent is to issue new site fee increase notices relevant for the period 15 May 2024 – 14 May 2025 in accordance with declarations 1 and 2 above to the 22 applicants in these proceedings and within 28 days of today’s date; and

3     The Respondent is to either refund all site fees overpaid to it by the 22 applicants on or after 15 May 2024 within 28 days of today’s date, or credit those overpayments to any future liability of site fees of those 22 applicants at the discretion of each of the 22 applicants, which discretion is to be notified to the Respondent within 14 days of today’s date or as soon as possible thereafter.

Catchwords:

LAND LAW - Residential (Land Lease) Communities – increase in site fees – ‘by notice’ method – whether excessive – consumer price index – ss. 73 and S. 74 – increase in outgoings and expenses of respondent – representative application – appropriate relief

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Residential (Land Lease) Communities Act 2013 (NSW)

Residential (Land Lease) Communities Amendment Act 2024 (NSW) No.46

Cases Cited:

Morris v Kincumber Nautical Village Pty Limited [2024] NSW CATCD unreported, 11 September 2024

Walker v Hampshire (Pambula) Pty Limited t/a Acacia Ponds [2022] NSW CATCD 204

Rowe v Kincumber Nautical Village Pty Limited [2002] NSW SC 533

Burgess v. Aspen Living Villages Pty Ltd [2021] NSWCATCD unreported, 10 May 2021

Sunrise Property Holdings Pty Ltd v Gregg [2019] NSW CATAP 253

Marsh v Pines Resort Management Pty Limited [2021] NSWCATCD 127

Category:

Principal judgment

Parties:

Peter Burgess, Applicant

Aspen Living Villages Pty Limited ACN 114 904 415, Respondent

Representation:

Mr Peter Burgess, Applicant in person for himself and as a representative of the other 22 homeowner applicants of the residential community.

Mr Ben Schmidt and Ms Alison Langley for the Respondent

File Number(s):

2024/00170721

Publication restriction:

Unrestricted

REASONS FOR DECISION

Introduction

1. This is a representative, residential communities application made pursuant to the Residential (Land Lease) Communities Act 2013 (NSW) (RCA).

2. Mr Peter Burgess is the representative applicant (Applicant) who executed a site agreement pursuant to Schedule 1 of the Residential (Land Lease) Communities Regulation 2015 to lease a residence in Barlings Beach Holiday Park at Rosedale NSW 2537 (BBHP).

3. The Respondent is the operator of the BBHP. BBHP is situated in the town of Rosedale between Batemans Bay and Moruya on the NSW far south coast and comprises 22 acres of beachside land adjacent to the beach.

4. The Respondent is part of the Aspen Group, an ASX-listed provider of accommodation in retirement lifestyle, holidays and residual living. Its core target customer base is the 40% of Australian households with an annual income of less than $90,000.00, as its website proclaims.

5. BBHP is a mixed-use park. According to the Respondent’s submission, ‘… there are 235 short-term sites comprising 180 long‑term casual sites, 30 tourist short stay cabins and 25 grassed campsites. Additionally there are 23 permanent (land lease) sites which are the subject of this application’.

6. There is some confusion about the precise number of permanent (land lease) sites in BBHP and therefore the number of sites (and applicants) in this representative proceeding. The Applicant states in the Application filed in the Tribunal on 17 April 2024 that there are 22 homeowners (including Mr Burgess) objecting to the Respondent’s site fee increase from 15 May 2024. The Centrelink Concession Cards annexed to the Application identify 22 sites. The ‘Schedule of Affected Home Owners’ annexed to the Applicant’s documents identifies 22 sites and 34 residents as forming the representative group, each site having signed the Schedule. Conversely, the Respondent refers in its documents and submissions to ‘23 permanent (land lease) sites which are the subject of this application’. Based on the Applicant’s evidence, and the fact that previous Tribunal proceedings involved 22 sites (Burgess v. Aspen Living Villages Pty Ltd [2021] NSWCATCD unreported, 10 May 2021 at [2]), the Tribunal shall adopt that number for the purposes of these reasons for decision.

7. Mr Peter Burgess is the representative of the group of 22 permanent (land lease) site owners. Section 69(3) of the RCA states that homeowners may nominate a representative under s.146 of the RCA for the purposes of the mediation of their objection to site fee increases, and that the nomination must be made in accordance with the prescribed procedure if the regulation so provides.

8. The only regulation the Tribunal can identify that impacts upon the nomination process of a representative is regulation 15(2)(b) of the Residential (Land Lease) Communities Regulation 2015 (NSW) which states that in determining the percentage of homeowners in connection with an application under s. 69(2) of the RCA for mediation, regard is to be had to only one homeowner for each residential site.

9. The application is a Residential Communities Collective Application received in the Tribunal’s Wollongong Registry on 17 April 2024. In it, the Applicant purports to represent himself and the other 22 permanent (land lease) sites.

10. A letter dated 8 April 2024 from NSW Fair Trading to the Applicant refers to the unsuccessful mediation of this dispute by telephone.

11. Although the letter does not state the precise date upon which the telephone mediation was held, it acknowledges that following the unsuccessful mediation, any application to the Tribunal must be made within 14 days of the mediation having failed. That appears to have occurred in this instance and there is no dispute as to the jurisdiction of the Tribunal to hear this application on this basis.

12. Where a representative application of this type is made the list of participating applicants or homeowners from the relevant community is usually annexed to the application filed in the Tribunal thereby confirming each homeowner’s authority for the representative application: see Walker v Hampshire (Pambula) Pty Limited t/as Acacia Ponds [2022] NSW CATCD 204 at [1]-[2] and [16]. In this instance, copies of Centrelink Concession Cards for 18 of the 22 applicant homeowners or sites (including Mr Burgess) were filed with the application on the Tribunal’s file.

13. For completeness, the mediation in April 2024 appears to have been conducted in compliance with s. 69(2) of the RCA by having “at least 25%” of the effected homeowners participate in the mediation. In this case, and from the Respondent’s evidence, all of the permanent (land lease) site owners have participated in both the mediation and now the Tribunal application.

Jurisdiction

14. The Tribunal has jurisdiction to hear and determine these applications brought pursuant to s. 73 of the RCA and s. 28 of the Civil and Administrative Tribunal Act 2013 (NSW).

Legislation

15. Section 156 of the RCA provides that:

“156. Applications to Tribunal relating to Disputes

(1)   A home owner, former home owner or operator of a community may apply to the Tribunal for determination of any of the following:

(a)   a dispute relating to a right or obligation under this Act,

(b)   a dispute arising from, or relating to, a site agreement or collateral agreement,

(c)   any other matter that may be determined by the Tribunal under this Act.

(2)   An application to the Tribunal must be made within the period (if any) specified in this Act or prescribed by the regulations.”

16. Section 67 of the RCA provides:

“67.   Increase of Site Fees by Notice

(1)   This section applies to a site agreement that provides for the increase of the site fees by notice (otherwise than by a fixed method).

(2)   An increase in the site fees is not payable unless the fees are increased in accordance with this section.

(3)   The site fees must not be increased except by notice in writing given to all the home owners in the same community at the same time under site agreements to which this section applies.

(4)   The notice must –

(a)   specify the amount of the increased site fees, and

(b)   specify the day (the ‘effective day’) on and from which the increased site fees are payable, and

(c)   include an explanation for the increase, and

(d)   include such other information as may be prescribed by the regulations, and

(e)   be in the approved form (if any).

(5)   The date specified as the effective day must not be earlier than 60 days after the day on which the notice was given.

(6)   Site fees must not be increased more than once in any 12-month period under this section. This is calculated by reference to the date from which the increased site fees are payable.

(7)   Increases under this section in site fees payable by home owners in the same community under site agreements to which this section applies must take effect on the same day (and not on different days).

(8)   A notice under this section may be cancelled.

(9)   A later notice may provide for a lesser increase than that specified in an earlier notice under this section. A later notice has effect instead of the earlier notice and takes effect from the date on which the earlier notice was to take effect.

(10)   If the site fees payable under a site agreement are increased under this section, the terms of the agreement are varied accordingly.

(11)   If a person becomes a home owner after a notice has been given under this section to other home owners in the community but before the date the increase takes effect –

(a)   the operator must notify the home owner of the notice and its contents and effect, and

(b)   the increase applies as if the notice had been given to the home owner at the same time as it was given to other home owners.”

17. Section 69 of the RCA provides:

“69.   Mediation

(1)   This section applies if site fees are increased by notice (otherwise than by a fixed method). However, this section does not apply to an increase in site fees objected to solely on the ground that the increase is substantially excessive when compared with increases for similar residential sites in the community.

(2)   An objection to an increase in site fees on the ground that the increase is excessive may be made by lodging an application for mediation under Division 2 of Part 12 signed by at least 25% (or a lower percentage prescribed by the regulations) of the home owners who received the notice within the first 30 days of the notice period, and not otherwise.

(3)   Home owners may nominate a representative or representatives under section 146 for the purposes of the mediation of the objection. However, the nomination must be made in accordance with the prescribed procedure if the regulations so provide.

(4)   The parties to the mediation must use reasonable endeavours to participate in and finalise mediation before the effective day for the fee increase.

(5)   A home owner may opt out of the mediation, and agree to pay the increase, but only if the home owner follows the process set out in the regulations.

(6)   The fact that one or more home owners opt out of the mediation, after an application for mediation is made, does not prevent the continuation of the mediation in respect of the remaining home owners.

(7)   The regulations may make provision for or with respect to the mediation of objections to increases in site fees.”

18. Section 71 of the RCA provides:

“71.   Application following failed mediation

(1)   One or more affected home owners may apply to the Tribunal for an order under section 73 if -

(a)   the home owners object to the increase in site fees, and

(b)   an application for mediation of the objection was made in accordance with section 69, and

(c)   mediation was unsuccessful.

(2)   The application must be made on behalf of all the affected home owners (other than those who opt out of the application) by one or more of them appointed as the representative or representatives by the participating home owners.

(3)   The application must be made within 14 days after the date on which the mediation failed.

(4)   The application must be accompanied by a notice from the mediator stating mediation failed on the date specified by the mediator.”

19. Section 73 of the RCA provides:

“73.   Orders as to excessive increases in site fees

(1)   The Tribunal may, on application under section 71 or 72, make any of the following orders –

(a)   an order declaring that an increase in site fees is excessive,

(b)   an order reducing the amount of the increase by a specified amount,

(c)   an order setting aside the increase,

(d)   an order that the site fees must not exceed a specified amount or specified amounts, either –

(i)   from a specified day, not being earlier than the day from which the increased site fees were payable, or

(ii)   during a specified period,

(e)   an order confirming the increase on the conditions (if any) that the Tribunal considers appropriate,

(f)   any ancillary order that the Tribunal, in the circumstances, thinks appropriate.

(2)   The Tribunal may make orders applying to individual participating home owners, groups of participating home owners or all participating home owners.

(3)   An order applies to all affected home owners in the community (other than those who opt out), unless the Tribunal is satisfied there is a strong reason for making separate orders for different home owners or groups of home owners.

(4)   The Tribunal cannot make an order that would result in an increase lower than that needed to cover any actual or projected increase (established to the satisfaction of the Tribunal) in the outgoings and operating expenses for the community since the previous increase (if any) in site fees for the community.”

20. Section 74 of the RCA provides:

“74.   Matters to be considered about excessive increases

(1)   The Tribunal may have regard to any or all of the following factors when deciding whether to make an order under section 73 -

(a)   the frequency and amount of past increases in site fees for the community,

(b)   any actual or projected increase in the outgoings and operating expenses for the community as provided by the operator since the previous increase (if any) in site fees for the community,

(c)   any repairs or improvements to the community -

(i)   carried out by the operator since the previous increase (if any), or

(ii)   planned by the operator for the period covered by the increase being reviewed,

(d)   the general condition of the community including its common areas,

(e)   the range and average level of site fees within the community,

(f)   the value of the land comprising the community, as determined by the Valuer-General,

(g)   the value of any improvements to the community (including common areas) paid for or carried out by home owners,

(h)   any explanation for the increase provided by the operator by notice in writing to the affected home owners,

(i)   variations in the Consumer Price Index (All Groups Index) for Sydney,

(j)   whether the increase is fair and equitable in the operation of the community,

(k)   any other matters prescribed by the regulations.

(2)   The regulations may require the Tribunal to disregard any specified matters (not being a matter referred to in subsection)

(1), in any specified circumstances, when deciding whether to make an order under section 73.”

Site fee increase

21. The Applicant annexed to the application a copy of the Notice of Site Fee Increase dated 11 March 2024 in respect of Site 208 (Notice). The homeowners are Peter and Leanne Burgess. The Notice was given pursuant to s. 67 of the RCA.

22. The Notice notified the homeowners that their increased site fees would be $172.48 per week, payable fortnightly and on and from 15 May 2024.

23. Importantly, under the heading “Explanation for the Increase”, the Notice stated in full:

“In determining the site fee increase Aspen has assessed various increases to operational expenses including but not limited to, employee costs (increase of 15%), electricity utilities cost (increase of 6%), waste disposal cost (increase of 23%) and other operation expenses. Additionally, in the 12 months to December 2023 the increase in CPI (Sydney) was 4.1%.

Also reviewed was the frequency and amounts of previous annual site fee increases with consideration taken to achieve a fair and equitable application of appropriate fees, distributed justifiably among all park users, to ensure the continuation of ongoing maintenance and improvements to communal services and facilities that are available for use by all park occupants, including home owners.

As these items impact directly upon the operation and sustainability of the community this site fee increase is required help to maintain the continued viability of the community”.

24. Pursuant to s. 184 of the RCA the Notice was given to the Applicant by leaving it in the Applicant’s mailbox. The site fee increase nominated by the Respondent was 15.0%. There was no dispute that this was the nominated figure between the parties.

25. The Applicant’s application dated 17 April 2024 stated the following reasons for objecting to the site fee increase:

‘The notified site fee increase of 15% is unreasonable and excessive.

The Notice stated that some operational expense items had increased over the past 12 months – employee costs (+ 15.0%), electricity costs (+6.0%) and waste disposal costs (+23.0%). Evidence of these increases was not provided.

Other items were mentioned in vague and general terms but again no evidence was supplied to justify such a large increase. The Notice states that Sydney CPI for the period was 4.1%’.

26. At the time the Application was filed the Respondent had not submitted any documents or evidence in support of its increase. This was done following directions made at the first directions hearing of the application on 1 July 2024 at Wollongong. Pursuant to those directions, the Respondent was to lodge with the Tribunal and give to the other party the documents that it relied upon by 15 July 2024, the Applicant was to lodge with the Tribunal and give to the other party the documents upon which he relied by 5 August 2024 and any documents in reply by the Respondent would be lodged with the Tribunal and given to the Applicant by 19 August 2024.

27. The parties confirm that the reasons the directions had been framed in this manner - with the Respondent leading and the Applicant replying - was so that the Respondent could provide to the Applicant all the evidence upon which it relied to justify the increase in site fees of 15.0% first and the Applicant could then respond.

Hearing

28. These proceedings had a half day hearing which was listed in the Tribunal at Batemans Bay on Tuesday 24 September 2024 at 1.15 pm for a 3 hour hearing.

29. As a result of the unavailability of sheriff’s officers to secure the Batemans Bay court room on that day, the hearing was moved to a hearing by AVL or telephone in Hearing Room 5.1 of the Tribunal at Parramatta on 24 September 2024 at 1.15 pm. Ultimately, the matter was heard by telephone link between the parties which afforded no disadvantage to either party to put their case.

28. Mr Burgess appeared by telephone on behalf of the Applicants and Mr Ben Schmidt and Ms Alison Langley, both officers of the Respondent, appeared for BBHP.

29. Each party had prepared a bundle of documents which the Tribunal was taken through in some detail. These include:

1. a 47 page bundle of the Respondent received by the Tribunal on or about 12 July 2024;

2. evidence of the Applicant received by the Tribunal on or about 5 August 2024; and

3. a further 207 page bundle of the Respondent received by the Tribunal on or about 19 August 2024.

32. Because of the significant size of the Respondent’s evidence-in-reply, and because the Applicant had not had a formal opportunity in the timetable to respond to some of this material, the hearing proceeded by way of the Applicant addressing the Tribunal in respect of its own evidence and documents and then addressing on the Respondent’s evidence and documents, especially its evidence‑in‑reply.

33. Mr Ben Schmidt, the Head of Operations of the Respondent, then addressed the Tribunal in respect of the Applicant’s evidence and documents and in support of the site fee increase more generally.

34. In this way both parties had the opportunity to cover all issues which they sought to do while at the same time responding to their opponent’s submissions.

35. There was no cross-examination of any lay witness and the hearing proceeded largely by way of oral submissions based on the documents.

Evidence

36. The Applicant claims that the site fee increase payable on and from 15 May 2024 at a rate of 15.0% is excessive.

37. The Applicant bears the onus of proof in this case.

38. When determining whether the Applicant has proved its case, s. 74 of the RCA outlined above sets out those matters which may be considered by the Tribunal. The wording of s.74 suggests that the Tribunal has a discretion in its consideration of each item and of the weight given to each item in its determination.

39. The Tribunal proposes to exercise that discretion in its consideration of these items.

40. Each of the matters in s. 74(1)(a)-(k) of the RCA are considered below by reference to the evidence that was placed before the Tribunal by each of the parties. The Tribunal considers this is the most efficient way to proceed to some determination in all the circumstances.

(a)   The frequency and amounts of past increases in site fees

41. The Aspen Group purchased BBHP in February 2017. The Applicant submits that since then the site fee increases have been substantially higher than the Sydney CPI.

42. Both parties included a table of previous site fee increases in their written submissions.

43. The Applicant’s table goes back to site fees increases since 2014.

44. The Respondent’s table goes back to site fee increases since 2021.

45. The Applicant’s table is extracted in full below:

46. The Respondent’s table is extracted in full below:

Year	Average Homeowner Weekly Site Fee	Site Fee Increase (%)	Site Fee Increase ($) (average)
2021	$125.51	3.5%	$3.85
2022	$130.67	6%	$6.00
2023	$134.67	4%	$4.98
2024	$154.65	15%	(average) $19.98

47. The Applicant submitted at the hearing that the Respondent’s table was inaccurate, for instance, the 3.5% increase should be for 2020, not 2021 as the 2021 proposed increase of 9.3% was set aside by the Tribunal in Burgess v Aspen Living Villages Pty Limited [2021] NSWCATCD, unreported, 10 May 2021, SM P. Boyce. As a result, there was no increase that year.

48. The Respondent submitted that the proposed site fee increase of 15% for 2024 was higher than previous years but the Respondent considered the increase was justified and still represented ‘excellent value’ to the Applicant.

49. The Applicant submitted the following:

1. in 2017 and after only 5 months’ ownership, the Respondent notified a site fee increase of 4.5% that was ultimately decreased to 3% after mediation at a time when the Sydney CPI was 2%;

2. in February 2019 the Respondent notified a site fee increase of 3% despite the CPI being 2.1%. Again this was decreased by mediation to 2.5%;

3. in February 2020 the Respondent issued a notice of site fee increase of 6.62% despite the Sydney CPI being 1.6%. Mediation failed to find common ground but there was subsequently a negotiated outcome of 3.5% immediately prior to a Tribunal hearing on 20 July 2020;

4. in February 2021 the Respondent issued a notice of site fee increase of 9.3% despite the CPI being 0.8%. On 10 May 2021 the Tribunal set aside the increase altogether on the basis that it was excessive: Burgess v Aspen Living Villages Pty Limited [2021] NSWCATCD, unreported, 10 May 2021, Senior Member P. Boyce.

5. on 28 July 2021 just 3 weeks later the Respondent issued a notice of site fee increase of 9.0%, effectively backdated to February 2021. This notice was withdrawn on 5 August 2021 by the operator after objections from the homeowners that the notice was invalid. The homeowners had contended that the notice made a mockery of the Boyce decision (above) and was arguably in contempt of the Tribunal;

6. on 5 August 2021 the Respondent re-issued a notice of site fee increase of 9% with an effective date of 13 October 2021. The homeowners applied to the Tribunal to set aside the notice as it was within 12 months of the previous site fee increase which had been set aside in the Boyce decision.

7. On 6 December 2021 the homeowners’ application was dismissed and an appeal to the Appeal Panel of the Tribunal was lodged on 15 December 2021. The appeal hearing was scheduled for 8 March 2022 but on 2 February 2022 the parties agreed to a site fee increase of 6% effective 15 April 2022 and a site fee increase for the following year of 4% effective 15 April 2023, and the appeal was withdrawn.

50. In respect of this historic evidence of site fee increases at BBHP, the Tribunal prefers the Applicant’s table and evidence. It is more detailed and comprehensive and is tailored to the specific circumstances of the homeowner sites. The site fees associated with the homeowners are significantly greater than the “average homeowner weekly site fee” referred to by the Respondent. The Applicant submits that this is an irrelevant consideration. In addition, the Applicant’s table is comprehensive, provides greater context and history, and is without error.

(b)    Any actual or projected outgoings and operating expenses for the community as provided by the operator since the previous increase (if any) in site fees for the community

51. The Respondent included in its first submission a summary of outgoings and expenses from the profit and loss statement for BBHP. A redacted and edited version of outgoings and expenses from that profit and loss statement is on p. 4 of its submission dated 12 July 2024.

52. The table showed actual outgoings and expenses to May 2024 when the site fee increase took effect. They are compared in the table to the equivalent period in FY23. The expenses and outgoings in the table are extracted from the profit and loss statements which are apparently externally audited twice yearly in accordance with the ASX requirements of the Aspen Group. The Respondent submitted that the expenses disclosed in the 11 months to May 2024 showed an increase of $124,568.00 or 11.5% compared to the equivalent period in FY23. If shared equally across all 233 sites, the increase in outgoings equated to $534.63 per site or $10.25 per week.

53. The Applicant referred to the inconsistency between the increase in expense items in the Respondent’s submission and the reasons for, and amounts of, the increase outlined in the Notice. It particularly referred to the claimed increases in employee costs in the Notice of 15%, as against 11.9% in the table; claimed increase in electricity utilities cost of 6% in the Notice against a reduction of 13.7% in the table; a claimed increase of 23% for waste disposal costs in the Notice against an increase of 11.1% in the table.

54. The Applicant attached to its submission pages from the consolidated interim financial statements of Aspen Group Limited, the ASX-listed company dated 31 December 2023. While it showed valuation of Aspen Group’s park properties, it did not show the annual profit and loss statements for BBHP (and each of the other park properties) which existed. But the Respondent apparently elected not to disclose this information in full.

55. The paucity of financial documentation disclosed to homeowners and to the Tribunal in appeals against site fee increases when that site fee increase is made by notice are frequently commented upon in Tribunal decisions.

56. In Sunrise Property Holdings Pty Ltd v Gregg [2009] NSW CATAP 253 at [28]:

“The appellant chose not to tender various documents for various reasons. It is bound by that choice. The Tribunal was unpersuaded by a two‑page document from the appellant’s accountant unsupported by any corroborative, supportive document. All such documentation was in the possession of the appellant, and if it chooses not to supply proof of matters upon which it wished to rely then it cannot now complain that the Tribunal erred”.

57. In that appeal, Sunrise, the operator, had appealed against a 2% increase afforded it at first instance.

58. Similarly, Senior Member Boyce in Burgess v Aspen Living Villages Pty Limited [2021] NSW CATCD unreported, 10 May 2021 stated:

“In Sunrise Property Holdings Pty Limited v Gregg [2019] NSW CATAP 253, the Appeal panel said where documents are in possession of a party (the Operator) and the party chose not to tender the documents for various reasons then it cannot complain those documents cannot be relied upon as corroborative evidence”.

59. In its second submission dated 19 August 2024, the Respondent acknowledged that the correct calculation for its expenses was the 12 months prior to the date of the site fee increase Notice and not the date of the fee increase itself. It therefore recast its table in paragraphs 20-26 of its second submissions. These showed the actual outgoings for expenses incurred by the Respondent in the 12 months prior to 29 February 2024 compared to the 12 month period to 28 February 2023. Again, these tables were selectively edited or extracted from the profit and loss statement of BBHP which formed part of the financial statements of Aspen Group.

60. The table in the first submission of the Respondent contained 23 expense items compared across the two accounting periods. The table in the second submission of the Respondent contained 7 expense items compared in the periods 1 March 2023 - 29 February 2024 and 1 March 2022 – 28 February 2023. The percentage increase for those 7 items is 14.69% which supports the Respondent’s increase of 15%. However, there are some problems with the nature of this methodology:

1. taking 7 items from the BBHP profit and loss statement to support the outgoings and expenses’ increase the Respondent seeks may not be representative of a fair sample;

2. 7 items in the Respondent’s second submission when compared to the 23 items in the Respondent’s first submission (albeit for slightly different time periods) confirm that some of these items are wildly differently e.g. bank charges has an 81.9% increase in the first submission and an almost 2,000% increase in the second submission. No explanation is provided for this. How could bank charges vary so much in consecutive accounting periods? If this is a one-off increase then it is not representative and should be excluded (or at least explained) from any sample which purports to define actual increases. The Respondent has not done this;

3. during the hearing the Respondent noted that certain expenses had been redacted “which have no relevance to the Applicants”. The Respondent also excluded items such as cleaning supplies which may be only partly relevant to this calculation given that there is a cleaning of common areas in respect of which other categories of residents benefit at BBHP;

4. the Applicants in paragraph 32 of their submission asserted that the Respondent did not provide any information or evidence in connection with the actual increases. In response, the Respondent in its second submission attached a large bundle of invoices over the 24 month period from 1 March 2022 to 29 February 2024. Again, however, a cursory analysis of these documents by the Applicants showed some errors: p.129 of the Respondent’s second submission showed invoice dated 1 August 2024 for $599.90 worth of custom logo cookies from Pretty Bites in Enfield, Sydney for the Tween Waters Merimbula Park at Dunns Lane, Merimbula NSW 2548 and p.153 of the Respondent’s second submission showed an invoice from Telstra in the sum of $1,823.98 to Aspen Living Villages Pty Limited at Bolivar Park, South Australia, 5110. And respectfully, invoices alone don’t give the complete picture.

5. It is also clear to the Tribunal from the Aspen Group Limited consolidated financial statements of 31 December 2023 (submitted by the Applicant at pp.21-22 of its submission) that Aspen Group Limited operates 7 residential properties, 8 lifestyle properties and 8 park properties. At the hearing the Respondent advised the Tribunal that a separate profit and loss statement was maintained in respect of each of these properties. When the Tribunal enquired as to why the profit and loss statement for BBHP was not submitted in full so that a better overall assessment of the Respondent’s increase in outgoings and expenses for the relevant period could be ascertained, Mr Schmidt responded that providing that information would only result in further lines of enquiry by the Applicant seeking to challenge the additional matters contained in those financial statements. That was a curious response which may, or may not, be true but nevertheless, as stated above by the Appeal Panel and by Senior Member Boyce above, the Respondent risks having inferences made against it by the limited and edited disclosure of outgoings and expenses that it has made to the Tribunal.

6. in summary, and from the above, the Tribunal cannot conclude reliably on the evidence proffered by the Respondent that the Respondent’s costs and expenses have increased by 15% between accounting periods as alleged by the Respondent or, if they have, that this is properly attributable to operating expenses to which s.74(1)(b) of the LCA applies.

(c)   Any repairs or improvements to the community (i) carried out by the operator since the previous increase (if any), or (ii) planned by the operator for the period covered by the increase being reviewed

61. The Respondent in its first submission stated that it had made improvements to the community in the sum of $1,087,456.84 being $999,954.50 for road upgrades (mostly complete), $12,956.04 for CCTV upgrades around the park to improve overall security, $33,750 in street light upgrades including LED solar lights (which are more energy efficient and reduce electricity consumption) and $40,796.30 in respect of community recreation centre upgrades such as the camp kitchen, games room and community building.

62. The Respondent stated that as a result of Marsh v Pines Resort Management Pty Limited [2021] NSWCATCD 127 at [22], expenditure on sewerage and related works including road and storm infrastructure should be considered improvements to the community for the purposes of s.74(1)(c) of the RCA.

63. The Applicant in his submission stated while there had been “some improvements” in the community since the last site fee increase, they have been of a capital expenditure nature and of a large project nature. Concerningly:

1. the remaining dirt roads are not maintained, they are ignored;

2. grass mowing is left as long as possible and then undertaken without grass catchers on the mower;

3. tree maintenance is reactive i.e. removal is only done when the branch or tree falls.

64. In the Respondent’s second submission, it submitted that repairs and maintenance expenses are considered operational in nature and are reflected in the operational profit and loss statement for BBHP. Unfortunately, the Respondent declined to put that complete statement into evidence, relying on the items and amounts extracted above.

65. The Respondent also at the hearing reiterated the submission in paragraph 32 of its second submission namely that this expenditure is “likely to increase value to the home prices in the event home owners were to sell their homes and therefore it is fair and reasonable that the costs of such improvements be shared across the entire community”. When the Tribunal queried this it became apparent that there had been no sale of a residential site in BBHP for several years and that there was therefore no market data to support such a submission.

66. In fact all one could say about the value of BBHP was contained in the consolidated financial statements of Aspen Group Limited which showed an increase in the acquisition cost of the land from $18,107,000.00 in January 2017 to $23,047,000.00 at 30 June 2023, an increase of over 27% during that period. This represented a significant gain to the Aspen Group.

67. Also at p.27 of the Respondent’s second submission was a land tax assessment showing annual land tax for the 2023 tax year of BBHP assessed in the sum of $116,200 payable in three instalments of $38,733.40 on 8 May 2023, 7 June 2023 and 7 July 2023.

68. The Tribunal’s concern with this submission was that the taxpayer (and therefore landowner) was Evolution Trustees Limited atf the Aspen Property Trust, and not the Respondent. If land tax is payable, it appears to be payable by the landowner which is not the operator (Respondent). This again shows the shortcomings of a failure by the Respondent to disclose transparently its full balance sheet and operational outgoings and expenses in this application, where it seeks an increase in site fees of 15%.

(d)   The general condition of the community including its common areas

69. The Respondent submits a series of photographs in Appendix B of its first submission to support its claim that BBHP is exceptionally well maintained by the Respondent.

70. There is no doubt that the natural environment of BBHP on beachside land on the south coast of NSW is impressive.

71. The Applicant submits that the general condition of the community has not improved and that the mowing, gardening and park management’s policies are reactive rather than proactive.

72. The Applicant sites two applications that he has been required to make to the Tribunal in recent years to maintain common areas free of weeds and vermin. These resulted in consent orders to undertake what the Applicant regarded as standard gardening and park management procedures. In fairness, the Tribunal notes that these applications were made in 2018 and that this issue appears to be largely historic.

(e)   The range and average level of site fees within the community

73. In its first submission, the Respondent outlined the different classes of residents and site fees at BBHP which is a mixed-use park. They are:

1. Permanent resident site fees: these vary depending on whether the dwelling is single or double occupied. Prior to the site fee increase notice, they ranged from $117.46 to $149.98, an average of $134.68.

2. Long term casual site fees: there are currently 180 of these in the community with weekly site fees ranging from $159.06 to $190.90, an average of $165.78 per week. These vary depending upon where the site is positioned within the park but are on average $11.13 per week higher than those site fees paid by the 22 permanent residents who are applicants in these proceedings.

74. The Respondent in its submission is concerned about the discrepancy between the site fees paid by the two different classes of residents, however the long term casual residents have no statutory mechanism to oppose site fees which appear to have increased at a higher rate than for permanent residents since Aspen Group purchased BBHP in 2017.

75. The Applicants say any comparison to long term casual residents and their site fees is irrelevant and outside the relevant considerations in s.74(1)(b) of the RCA. The Respondent submits that even if the May 2024 site fee increase of 15% was applied to permanent residents, the average weekly site fees would still remain 7.2% lower than the site fees paid by the long term casual residents.

(f)   The value of the land comprising the community, as determined by the valuer-general

76. The Applicant in its submission simply noted that the latest UCV of the land of BBHB was $4,750,000.00.

77. The Respondent submitted that when the last site fee increase was accepted by the Applicants in 2022, the land value was $3.13 million and that there has been a 51.8% increase in the UCV of the BBHB land – resulting in increase council rates and land tax – in that period.

78. Again, the Respondent makes the point that this increase in land value will reflect in capital gains benefits to the Applicants on the sales of their homes for which the Respondent operator obtains no benefit but, as stated above, this is misguided since there is no apparent market for these properties.

79. Also, the issue that the land is owned by a separate entity and placed in a property trust reduces the impact of this submission. Any gain will be made by the Respondent and the Aspen Group.

80. Finally, it should be noted that as a result of Schedule 1 [15] of the Residential (Land Lease) Communities Amendment Act 2024 (No.46), paragraph 74(1)(f) of the RCA has been omitted prospectively as a matter for the Tribunal to consider in respect of excessive site fees as and from 25 September 2024. That date post-dates the filing and hearing of this application.

(g)   The value of any improvements to the community (including common areas) paid for or carried out by a home owner

81. The parties agree that there were no improvements paid for or carried out by the Applicants.

(h)   Any explanation for the increase provided by the operator by notice in writing to the affected homeowners

82. On 11 March 2024 the Respondent notified the Applicants of the proposed increase to weekly site fees in the Notice which has been referred to and extracted above.

83. The Applicants states that the explanation was “minimal, vague and in very general terms and unsupported by any corroborating evidence”. This has also been dealt with in paragraphs [53] above.

1. Variations in the Consumer Price Index (all groups index) for Sydney

84. The parties agree that the Sydney CPI for the 12 months ending 31 December 2023 was 4.2%, although 4.1% is referred to in the Notice.

(j)   Whether the increase is fair and equitable in the operation of the community

85. The Respondent maintains that a 15% increase in site fees for permanent residents is fair and equitable and the Applicant submits that it is neither fair nor equitable in the operation of the community.

86. The Applicants state that the BBHP comprises 22 permanent sites, 180 long term casual occupants and 25 camping sites. There are also 32 holiday cabins that are owned and maintained by the Respondent plus one manager’s residence, one office and one staff cabin. This is a total of 263 sites and any costs should be apportioned across all 263 sites, not the 233 sites referred to by the Respondent in its submission.

87. Additionally, all the permanent residents have their own bathroom, laundry and cooking facilities and are not dependent on the communal facilities for these purposes in BBHP that casual occupiers use. The repair and maintenance of these should be specifically excluded from the site fees of permanent residents. There was no evidence before the Tribunal that this occurs.

(k)   Any other matters prescribed by the Regulations

88. There are no other prescribed matters in the Regulations.

Consideration

89. The Respondent submits generally that the permanent residents of BBHP have paid relatively low site fees for an extended period and while the 15% site fee increase sounds significant it results in a range of increases from $35.24 to $44.99 per fortnight. The Respondent submits that even after these increases, the fees paid by the Applicants remain substantially lower than “every other comparable community in the region”. This assertion is made without detailed or reasonable supporting evidence.

90. The Tribunal has reviewed all of the above evidence in detail, and considers that the proposed site fee increase of 15% in the Notice for permanent residents of BBHP should be rejected for the following reasons:

1. First, the proposed increase is well above the Sydney CPI for the relevant period (4.2%), by almost 11%;

2. Secondly, because the Respondent has failed to provide transparent records of its outgoings and operating expenses at BBHP, or a profit and loss statement for the relative period of BBHP, it has failed to justify on financial grounds (such as its outgoings and expenses) the proposed increase;

3. Thirdly, there are not sufficient repairs or improvements to the community for the previous or current period which justifies such a significant increase; and

4. Fourthly, the explanation for the site fee increase provided by the Respondent in the Notice issued to the permanent residents is inconsistent with the financial evidence the Respondent has produced, which was in any case incomplete.

91. The Tribunal also queries the direct applicability and appropriateness of the CPI (All Groups) Index for Sydney to the costs and expenses of the Respondent operating in regional NSW on its south coast where living costs, wages, tradespeople, transport, fuel and materials are often at a materially lower cost than in metropolitan Sydney.

92. For these reasons, the Tribunal orders that the appropriate site fee increase for permanent residents for BBHP in respect of the period commencing 15 May 2024 should be less than the CPI (All Groups) Index for Sydney for the relevant period (4.2%). The Tribunal determines that 3.5% is an appropriate site fee increase from 15 May 2024 for the 22 permanent sites in these proceedings who operate under the ‘by notice’ site fee system and who have joined as representative applicants.

93. The Tribunal also orders that any overpayment of site fees by the 22 permanent sites in respect of the period after 15 May 2024 under Notices of Site Fee Increases similar to that received by Mr Burgess on or about 11 March 2024 should either be refunded by the Respondent to those permanent sites within 28 days or, at the permanent site’s election, be set off against further site fees payable by those residents in the current year until the overpayment balance is reduced to zero.

94. The Tribunal does not propose to make any order for costs as neither party was represented and neither party sought costs of the application against the other.

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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.

Registrar

Decision last updated: 07 May 2025