Forsyth v Haraba Pty Ltd t/a Brisbane Gateway Resort (No 2)
[2013] QCAT 708
•3 December 2013
| CITATION: | Forsyth & Ors v Haraba Pty Ltd t/a Brisbane Gateway Resort (No 2) [2013] QCAT 708 |
| PARTIES: | Carolyn Forsyth & Ors (Applicant) |
| v | |
| Haraba Pty Ltd t/as Brisbane Gateway Resort (Respondent) |
| APPLICATION NUMBER: | OCL063-12 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | 28 August 2013 |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Walker |
| DELIVERED ON: | 3 December 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. That the rent from 1 July 2012 be reduced to $392 per fortnight. 2. That the Respondent refund to the Applicants all moneys paid in excess of $392 per fortnight. 3. That the applications for costs in respect of Applications for Miscellaneous Matters be dismissed. |
| CATCHWORDS: | Manufactured Homes – Where Notice of Rent increase had been issued pursuant to the provisions of section 69 of Manufactured Homes (Residential Parks) Act 2003 – Where factors contained in section 70(3) considered – Where removal of on-site caretaker – Where focus of use of park changing and impact of change on residents – Where insufficient evidence of financial hardship – Benchmark Affordability Housing Rent Guide – Where costs order sought - Factors in section 102 of QCAT Act Manufactured Homes (Residential Parks) Act 2003 ss 12, 69, 70 Cramp, Beecroft & Ors v Haraba Pty Ltd as Trustee t/as Gateway Village Resort [2008] QCCTMH 020 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr M Hickey of Counsel, instructed by DLA Piper Australia |
| RESPONDENT: | Mr A Pitt, Solicitor of Hopgood Ganim |
REASONS FOR DECISION
Background:
At all material times the Respondent, Haraba Pty Ltd, was the registered owner of the Brisbane Gateway Resort which is located at 200 School Road, Rochedale.
The Park is a “residential park” as defined in section 12 of the Manufactured Homes (Residential Parks) Act 2003 (the Act).
Haraba Pty Ltd was, at all material times, a “park owner” as defined in the Act.
The park is of a type commonly called a “mixed use park”. It contains 50 manufactured home sites as well as sites for caravans, motor homes and camping sites occupied for holiday cabin accommodation and sites occupied by park owned rental homes. There are a range of facilities in the park that will be referred to in more detail later.
Pursuant to written agreements with each of the Applicants Haraba introduced new rental based on a market review as and from July 2012. The effect of the market review imposed by Haraba was to bring each of the rents into line, though prior to this there were a number of different bases.
The Dispute:
The Applicants are residents of the park and the Application they have filed disputes the site rent payable pursuant to their agreements and seeks an order that the Tribunal set aside the increases on the grounds that they are excessive.
The extent of the increase itself is also the subject of some dispute between the parties. For the Applicant it is said that the rental figure that should be considered by the Tribunal is $412 per fortnight. They concede that if the Applicants paid the site rent in full by the due date they receive a discount of $10 and if they pay by direct debit they receive a further discount of $1 per fortnight. Because the discounts are discretionary in nature they say the figure that the Tribunal should consider is a sum of $412 per fortnight.
By way of contrast Haraba says it is the “discounted” rent which is the one actually paid and which is relevant for the purposes of this Application.
Relevant Legislation:
Part 11 of the Act deals with variations such as to site rent. Sections 69 and 70 within Division 2 of Part 11 as amended apply to this matter. The submissions of the Applicants and Haraba and the application itself require a consideration of the operation of sections 69 & 70 which are as follows:
Section 69 relevantly provides:
69 Notice of increase in site rent
(1)This section applies if a site agreement—
(a) provides for an increase in the site rent payable under the agreement; and
(b) states how the amount of the increase is to be calculated.
(2) If the park owner wishes to increase the site rent under this section, the park owner must give the home owner a notice stating the following—
(a) the amount of the increased site rent;
(b) how the increased site rent has been calculated;
(c) the day the increased site rent is first payable (the increase day).
(3) The park owner must also state in the notice that if the home owner considers the increase is excessive, the home owner may apply to the tribunal, within 28 days after receiving the notice, for an order reducing the amount of, or setting aside, the increase.
Maximum penalty—100 penalty units.
(4) The increase day must not be earlier than 28 days after the notice is given.
(5) The increased site rent is payable from the increase day.
70 Home owner may apply to tribunal for order about site rent increase
(1) This section applies if—
(a) the park owner for a residential park gives a home owner notice, under section 69, of an increase in the site rent payable under the site agreement between the parties; and
(b) the home owner considers the increase is excessive.
(2) On application by the home owner made within 28 days after receiving the notice, the tribunal may make any of the following orders—
(a) an order reducing the amount of the increase by a stated amount;
(b) an order setting aside the increase;
(c) an order confirming the increase on the conditions, if any, the tribunal considers appropriate;
(d) another order the tribunal considers appropriate.
(3) In deciding the application, the tribunal may have regard to the following—
(a) the range of site rents usually charged for comparable sites in comparable residential parks in the locality of the park;
(b)if it is impractical to obtain data for the range of site rents mentioned in paragraph (a), data is not available for that range or it is just and equitable to do so in the particular circumstances—the range of site rents usually charged for comparable sites in comparable residential parks in comparable localities to the locality the park is in;
(c) if it is impractical to obtain data for the range of site rents mentioned in paragraph (a) or (b), data is not available for that range or it is just and equitable to do so in the particular circumstances—general trends in rent or residential accommodation in the locality the park is in;
(d) the increased site rent compared to the previous site rent;
(e) the frequency, and amount, of past increases in the site rent payable under the agreement;
(f) any increase in the CPI number during the previous site rent period;
(g) the amenity or standard of the common areas and communal facilities;
(h) any withdrawal of a communal facility or service previously provided at the park;
(i)any addition of a communal facility or service not previously provided at the park;
(j) any increase in the park owner’s operating costs for the park during the previous site rent period;
(k) whether the increase is fair and equitable in all the circumstances of the case;
(l) anything else the tribunal considers relevant.
(4) If, in deciding the application, the tribunal makes an order mentioned in subsection (2)(a) or (b), the park owner must refund to the home owner any overpayment of the site rent since when the increased site rent has been paid.
Maximum penalty—10 penalty units.
(5) An amount payable to the home owner under subsection (4) is recoverable as a debt.
(6) In this section—
CPI means the all groups consumer price index for Brisbane published by the Australian statistician.
previous site rent means the site rent payable under the agreement before the increase.
previous site rent period means the period commencing on the first day the previous site rent was payable and ending on the day the tribunal decides the application.
The roll of the Tribunal in this proceeding is to determine whether or not the increases imposed are appropriate having regard to the matters listed in detail in section 70(3).
The task of this Tribunal in this proceedings has been appropriately stated by Member Ms G Spender in the Decision of Cramp, Beecroft & Ors v Haraba Pty Ltd as Trustee t/as Gateway Village Resort, where she stated:
The Tribunal’s task is to determine whether the site rent fixed at $185 per week does indeed represent a market rent and then to determine whether, having regard to the matters set out in Section 70(3) of the Act the increase imposed is just and equitable in all the circumstances.[1]
[1]Cramp, Beecroft & Ors v Haraba Pty Ltd as Trustee t/as Gateway Village Resort, [2008] QCCTMH 020 (Cramp) at [6].
The Increase In Question:
Each of the applicants has entered into a written site agreement in respect of their occupation of manufactured homes in the park. Common to the Agreements of all Applicants is a clause that requires an annual review based upon the consumer price index and a four (4) yearly review to market on the 1st of July in each leap year.
On 2 July 2012 the Respondent, Haraba Pty Ltd, increased the Applicant’s site rent pursuant to the 4 yearly market review provision on 4 July 2012. Pursuant to section 69 of the Act, Haraba Pty Ltd, notified each of the manufactured home owners in the park about the increase. This Notice was in writing. There have already been two applications in respect of this matter determined by the Tribunal and the result of those decisions is that the Notices themselves are valid for the purposes of the Act as are the provisions in the Site Agreements that give rise to the ability to invoke the 4 yearly review to market.
The sole issue that remains for consideration in this case is whether the increases imposed are reasonable and appropriate having regard to the provisions in the Act.
A preliminary question that has be decided is just what is the “rent” being paid. The issue arises because the rent is said to be $412 per fortnight, but providing this is paid on time and the site agreement is complied with it is reduced by $10 per fortnight. Further if it is paid by direct debit a further reduction of $1 is applied.
The Applicants say that the decision whether or not to grant the discount is entirely discretionary and for that reason the full rent only that should be considered as the rent payable. Despite this submission they were only able to give evidence of a single example where the discount had not been applied.[2]
[2]See statement of Kevin Ward Cooper.
Haraba, by way of contrast says that the rent that the Tribunal should consider is the discounted rent which is the one it says is in fact paid by the parties.
Mr Holland gave oral evidence that he had never taken away the discount on a discretionary basis and could not envisage circumstances in which he would do so. But strictly also, I’m not convinced that the question of whether or not there has been compliance with the terms of the site agreement is in fact discretionary in the way alleged. Certainly there can be elements of discretion involved in making such a decision, however it would be in any event be susceptible to review in one form or another.
For the purposes of this proceeding then the rent that should be considered is the one generally paid, namely the discounted rent $401 per fortnight.
The Evidence:
The evidence in these proceedings consisted of the documents identified in Exhibit 1[3] and the documents identified in Exhibit 2[4].
[3]List of Documents Relied on by the Applicants.
[4]List of Documents Relied on by the Respondents.
There was no cross examination of any of the Applicants required by Haraba.
For Haraba evidence was given by Russell Vincent Holland, a Director and by Jamie Brown, a registered Valuer.
Mr Brown was subjected to detailed cross examination about the valuation process. At the end of the day, I took his evidence to be that you need to take a fairly broad brush approach based upon general impressions as much as anything in finding direct comparisons for valuation purposes and specifically for the purposes of considering section 70 of the Act.
In my view such an approach seems to have a lot to commend it. Furthermore, Mr Brown, being a specialist in the field of residential parks seems the best person qualified to undertake this exercise. Mr Brown impressed me as a person who was very familiar with all the parks and in particular the parks referred to in his written evidence[5].
[5]See statements of Jamie S Brown dated 5 December 2012 and 22 April 2013.
I therefore accept his evidence as to the best comparisons. I am also comforted in this decision by the decision in Cramp[6], where Member Spender undertook the exercise of determining comparable parks and came up with the same two parks without the assistance of a valuer.
[6]Op cit at [12].
Nevertheless, I would note that his reports appeared to contain an error so far as the issue of an onsite caretaker is concerned. His first report indicated that this is a facility of the report[7], and his second report by way of contrast says that this facility has not been available to residents since 2007, namely before the 2008 market review[8]. Such a conclusion is, however, apparently erroneous when one considers the decision of Member Spender[9]. She plainly lists “onsite caretaking” as being one of the facilities of the park. If more was needed Mr Holland, in his evidence, conceded that while this facility had been available on an “on again off again” basis. Most recently there had been one well into 2009.
[7]See report of 5 December 2012 at [33].
[8]See report of 22 April 2013 at [70].
[9]See decision in Cramp at [8(h)].
There is no doubt that this facility is no longer available although other arrangements have been put into place by way of substitution for the removal of this. Most recently this has included phone calls from residents being directed to the mobile phone of a Duty Manager which Haraba suggests is equally as good from the point of view of the residents of the Park.
With due respect I do not accept that submission. While the park does not purport to be an over 50’s facility, the reality is that many of the residences are aged pensioners who will simply not feel as comfortable with this arrangement. Further, of course, response times for complaints would inevitably be increased to a degree. There is also unlikely to be such a general feeling of security among residents.
I therefore find that the taking away of an onsite manager constitutes the withdrawal of a communal facility or service, previously provided at the park for the purposes of section 70(3)(f) of the Act.
Further the valuation exercise conducted by Mr Brown has a deficiency which was highlighted by the cross examination, namely that his knowledge of the actual workings of the park is limited. Specifically it was put to him that he was not there at night or 24 hours a day to hear how things went on which he properly conceded was true.
That concession appears to be significant when considered in the context of the statements of the Applicants and the concession by Mr Holland that the focus of Haraba is to move away from manufactured homes although he does say it will remain a mixed use Park. The evidence clearly discloses however that already some sites previously used for manufactured homes have been converted to tourist type facilities. One of the factors relied on by the Applicants’ in this regard to demonstrate this change in focus was Haraba’s website. Whilst I accept that Haraba’s website is not the only form of advertising they do an examination of that site clearly indicates its focus is towards tourist type activities. This does seem to be the direction that is being taken.
This needs to be considered in the context of the Applicant’s evidence contained within the statements that this has led to increased noise within the park. Even if I did hold reservations about this the fact is that none of the Applicants were subjected to cross examination which really leaves me with little choice but to accept that evidence. I would note, however, that it also accords with common sense that people in short term holiday accommodation are likely to be more rowdy than permanent residents. It also accords, for example, with complaints about people residing in holiday accommodation areas adjacent to houses available for holiday letting.
Haraba points to a lack of complaints being evidence that this is not so, I note, however, that things may well be unpleasant within the park without getting to the point where a complaint is necessary. In addition it appears to be appropriate to consider the fact that, whatever the reason, there does not appear to be a good relationship between the Applicants’ and Mr Holland in particular, and that may well have discouraged residents from making complaints. Indeed there was evidence to the effect that some residents at least considered complaining to be a futile exercise.
As this process of changing the parks use focus is an evolving one it appears likely that this noise situation will only become worse. The noise and the possible increases in this are, in my view relevant for the purposes of section 70(3)(g), (k) and (l).
One other issue worthy of comment, in Mr Brown’s evidence is the issue of the size of manufactured home sites. It has been suggested that the sites in the Park are comparably large and that a larger site is preferable.
However as Mr Brown conceded in evidence, this is not necessarily as clear cut as it may sound. In particular in this park many of the residents are elderly and reliant on others to keep their yards mown and their gardens in good condition. For such people then, often the smaller sites are likely to indeed be more preferable.
Accordingly then, I find that the issue of site size between the park and the comparative parks is a minor to irrelevant issue.
The Applicant’s Submissions:
I have read and considered the whole of the Applicants’ submissions but in general, other than the matters averted to I do not accept them. The reasons for this are various but generally are best summarised by reference to the second statement of evidence of Mr Brown[10]. By way of example only some of the matters to which they refer such as the “library” was clearly taken away prior to the previous market review and should not be considered in this one. Further the disabled facility does not appear to be used by any of the permanent residents and in particular any of the Applicants indeed they would need to obtain a key from the park owner to even access them. Accordingly these issues appear to be minor to irrelevant.
[10]See statement dated 22 April 2013 from [10].
Specific comment needs to be directed to the issue of financial hardship in the context of “fair and equitable” for the purposes of section 70(3) of the Act. This has been the subject of a number of decisions of the Tribunal and in my view can only be used as a basis for assessment of hardship on an individual basis rather than across a whole class of applicants, each of whom will have varying circumstances. The only evidence led in respect of this matter has been general in nature. In addition I have been asked to consider the housing affordability criteria[11] which it is now agreed between the parties that the relevant figure is 30% of income.
[11]Benchmark Affordability Housing Rent Guide.
Both Parties have made vastly conflicting submissions on the way this should be interpreted. It does seem that in calculating percentages it should be the so-called “discounted” rent that should be considered.
It seems important that this is only a guide[12] and nothing more than that. Further, it would seem that at least in the case of pensioner couples and considering the figure of $401 per fortnight the hardship levels are not exceeded. With individuals they may well be in terms of actual percentages but again I am not given individual circumstances and financial evidence sufficient to consider individual cases and make a determination whether particular individuals may have suffered financial hardship.
[12]See Section 5 of the Benchmark Housing Affordability Rent Guide itself.
In the circumstances there is insufficient evidence to find that the increases will result in financial hardship and accordingly that the rises in that sense are not fair and equitable, particularly as the submission appeared to be that I should apply this consideration across the increases generally.
Specific comment needs to be made, also by reference to the provisions of section 70(3)(d) of the Act. The thrust of the Applicants’ submission in this respect appeared to be that because there have been CPI increases in each of the years prior to the market review increase it is not appropriate to further increase the rent above CPI.
On its own I do not see that this submission has any great value. This is no different to the way market reviews operate, for example, in respect of Lease agreements which commonly contain provisions for fixed or CPI annual increases together with periodic market reviews. The reality of it is that market forces do not necessarily move at the same rate as inflation and the purpose of the market review is to bring rents in line with market forces. The valuation evidence in respect of the matter as presented by Mr Brown, plainly suggests that market rents have increased over and above the CPI and subject to the reservations previously mentioned I accept that evidence, particularly in circumstances where no contrary valuation evidence was led.
Impact on Valuation:
The question for determination is then, what, if any impact the issues that I have identified as being relevant have and what should be considered to be a fair market rent. In my view the issues identified, namely the taking away of the on-site manager and increased noise within the Park, are not major in themselves but nevertheless they are worthy of consideration.
Mr Brown has identified a range of possible comparable rents being from $196 per week to $202.58[13]. Having regard to the factors that I have taken into account it seems that the lower end of this range is more appropriate having regards to the factors in section 70(3) than that currently being charged.
[13]See report dated 5 December 2012 at [76].
Accordingly I find that the appropriate market rent as at the date of the last market increase is the sum of $392 per fortnight, which is what has been referred to as the “discounted” rate and I order that all sums paid above that be refunded to the Applicants.
In making this order I do note, however, that Haraba were entitled to have a further CPI review as of 1 July 2013 and that CPI review should be taken into account in determining the appropriate amount of the refund.
Costs:
The Tribunal has also been asked to deal with Applications for costs in respect of the two applications for Miscellaneous Matters filed by the Applicants dated 29 April 2013 (the Defective Notice Application), and 14 May 2013 (the Non-Compliant Clause Application).
Both of those applications were dealt with on the papers and were dismissed.
In respect of each of those applications the issue of costs was not dealt with but was left to the final presiding Member – as it turned out, one and the same person.
It is therefore appropriate to deal with the Applications for costs in respect of each of those Applications.
Hopgood Ganim, on behalf of the Respondent provided written submissions. On behalf of the Applicants there were oral submissions made at the conclusion of the hearing but the Applicants decided not to take an opportunity offered by the Tribunal to present written submissions.
The Law:
The starting point for most applications for costs is section 100 of the QCAT Act which is in the following terms:
100 Each party usually bears own costs
Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding.
However section 102 of the Act does provide for the making of costs orders in particular circumstances:
102 Costs against party in interests of justice
(1) The tribunal may make an order requiring a party to a proceeding to pay all or a stated part of the costs of another party to the proceeding if the tribunal considers the interests of justice require it to make the order.
(2) However, the only costs the tribunal may award under subsection (1) against a party to a proceeding for a minor civil dispute are the costs stated in the rules as costs that may be awarded for minor civil disputes under this section.
(3)In deciding whether to award costs under subsection (1) or (2) the tribunal may have regard to the following—
(a) whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g);
(b) the nature and complexity of the dispute the subject of the proceeding;
(c) the relative strengths of the claims made by each of the parties to the proceeding;
(d) for a proceeding for the review of a reviewable decision—
(i)whether the applicant was afforded natural justice by the decision-maker for the decision; and
(ii)whether the applicant genuinely attempted to enable and help the decision-maker to make the decision on the merits;
(e)the financial circumstances of the parties to the proceeding;
(f) anything else the tribunal considers relevant.
In this case the Respondent submits that a number of these provisions are relevant, the first being the nature and complexity of these proceedings.
It is my view the proceedings, so far as these applications were concerned were certainly complex. Each of the Applications involved detailed consideration of the principles of statutory interpretation, the way in which amendments to the Legislation may have impacted on its interpretation, quite a number of previous decisions of this Tribunal and its predecessor as well as lengthy written submissions from both parties.
I further accept that it was predominantly the addition of these Applications that caused the Respondent to seek to be legally represented.
The second issue that the Respondent says is relevant is the relative strengths of the claims made by each of the parties to those proceedings. In this respect it submits, in essence, that while the issues were complex the position of the Applicants was not strong.
With due respect this is not a proposition with which I entirely agree. Certainly it is the case that the relevant legislative provisions had been considered by the Tribunal previously, and, so far as I can see, it is the case that in respect of each of those cases the law was effectively found to have been the same as it was found to be in these proceedings.
The real difference, however, is that in many of those cases the parties were not legally represented and the provisions were certainly not the subject of detailed argument as they were in this case. It seems not unreasonable for the Applicants to have taken the view that the matters, and the law so far as it impacted on the facts of this case, had not previously been the subject of detailed arguments and that it was appropriate for this detailed consideration to occur. In this respect the arguments advanced on behalf of the Applicants were not without merit and were not easily dismissed.
The Tribunal is further asked to consider the further circumstance raised by section 102, namely acting in a way that unnecessarily disadvantages another party.
It is certainly true that by bringing the two applications the Applicants caused the Respondent to incur, what are undoubtedly very substantial legal costs, as they would have incurred such costs themselves.
However a crucial part of the application for costs in this respect is found at paragraph 51 of the written submissions, namely “…the diversion of the proceedings by way of the Applications was without merit”. For the reasons stated previously, while the Applications were ultimately unsuccessful they were not, in my view, without merit. In the absence of such a lack of merit or in the absence of some other relevant behaviour this part of section 102 would seem to me to have no application. To decide otherwise would be to effectively decide that any unsuccessful case would be subject to a potential costs order pursuant to this subsection.
It is also obviously relevant to consider the financial circumstances of the Parties. While it is true that there has not been a detailed individual breakdown of the financial circumstances of the parties is certainly true that there is general evidence that the majority of them are pensioners and this would seem to be a relevant consideration.
It is certainly true that it is not necessary to find all elements of section 102 have to apply before a costs order can or should be made. In this particular case the strongest element of the costs application is really based on a supposed lack of merit of the Applications. As stated I do not accept that the Applications lacked merit and the other factors, such as the complexity of the proceedings are not, in this case, sufficient to displace the ordinary presumption raised by section 100 of the Act.
Therefore the Applications for costs in respect of both Applications are dismissed.
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