Franklin v Burleigh Town Village Pty Ltd
[2012] QCAT 668
| CITATION: | Franklin and Anor v Burleigh Town Village Pty Ltd [2012] QCAT 668 |
| PARTIES: | L (Glen) Franklin Ronald James Caddell |
| v | |
| Burleigh Town Village Pty Ltd |
| APPLICATION NUMBER: | OCL083-11 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | 25 May 2012 |
| HEARD AT: | Southport |
| DECISION OF: | Graham Quinlivan, Member |
| DELIVERED ON: | 12 December 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The applications by any persons who sought to be joined in the application of Mr Glen Franklin and Mr Ronald James Caddell dated 16 June 2011 are dismissed. 2. The application of Mr Glen Franklin and Mr Ronald James Caddell is dismissed and the increase in site fee is confirmed. |
| CATCHWORDS: | Market rent review – manufactured homes Manufactured Homes (Residential Parks) Act 2003, ss 69, 70 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr L (Glen) Franklin and Mr Ronald James Caddell |
| RESPONDENT: | Burleigh Town Village Pty Ltd represented by Brendan Beck and Geoff Allen |
Other persons in attendance:
Noel Robertson, David Rands-Trevor, Hazel Rands-Trevor, Sandra Kaye Allen, Mary Rose Whiffen, Janice Margaret Bosworth, Roger Edwin Gathercole, John Gillett, Narelle Porthouse, Valda Scown, Pam Gillett, Kay Sayer, Joan Hall, Shirley Bangeman, Ian Westall, Val Fullerton, Marlene Baker, Dianne Caddell and John Hall
REASONS FOR DECISION
Introduction
Mr Ronald Caddell and Mr Leslie Franklin (the Applicants) filed an application with the Queensland Civil and Administrative Tribunal (the Tribunal) on 20 June 2011. In that application they state that the applicants include the list of residents attached to the application. Mr Brendan Beck provided a response on behalf of Burleigh Town Village Pty Ltd.
On 19 October 2011 the Tribunal directed that “(e)ach applicant sign an agreement to be joined to the application and to be represented by nominated persons and file the agreement with the Tribunal by 4.00pm on 21 November 2011". That Direction was not complied with.
At the hearing on 25 May 2012 the applicants sought to include a further 177 possible applicants by providing individual documents which read:
“We the undersigned agree to have Mr Ron Caddell and Mr Glen Franklin (co applicants in the Tribunal (case OCL 83/11) both residents of Burleigh Town Village represent me/us the undersigned, and to act on our behalf in this manner (sic) and to make final decisions on our behalf.”
A list of the proposed applicants was not provided but a document entitled “Burleigh Town Village – Objections to Proposed Rent Rise Under Section 69” which appeared to list various names, some with ticks next to them, was included.
It was submitted by the applicants these persons should be added as parties in this application even though they had not complied with any of the time limits imposed by s 70(2) of the Manufactured Homes (Residential Parks) Act 2003 (the Act) to bring an application in their own names. This then raised the issue of whether they should be joined as parties.
The Tribunal decided to proceed with the hearing on the basis that this issue would be determined as part of the final decision. The applicants did not refer to this issue in their final submissions.
Mr Beck for the Respondent in his submissions dated 21 June 2012 says that 3 days before the hearing he contacted the Tribunal and was advised that only 2 applicants were listed as parties, namely Mr Franklin and Mr Caddell. He notes that a large number of persons proposed to be joined to the application were provided to the Tribunal at the hearing but were not given to him. He submitted that it is important that all applicants be categorized according to their type of agreement, being market review or 5% p.a. agreement. This was not done.
The Respondent argued that because these residents had not exercised their rights under s 70(2) of the Act they cannot avail themselves of a review of the site rental.
Under s 42 of the Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act) the Tribunal may make an order joining a person as a party if the person should be bound by or have the benefit of the decision or the person’s interests may be affected by the proceeding. It is a decision made in the interests of justice.
In this case the substantive application will require the Tribunal to consider if the proper process has been used to arrive at the new site rental and the residents do have an interest in the outcome. Findings by the Tribunal could affect the rent they have to pay.
Consideration can also be given to s 141 of the Act that enables a group of home owners to make a joint application. This section reflects a similar provision at rule 11 in the QCAT Rules. Provisions that allow for a group application must anticipate changing situations. For example if there was a change of ownership during the course of an application the new owner would have an interest which could be protected by being joined.
In order to properly join these additional persons to these proceedings the Tribunal would need to be able to accurately identify them and then provide the respondent with an opportunity to consider the impact of including them as applicants. The Tribunal is required to deal with matters in a way that is accessible, fair, just, economical informal and quick. These persons have had ample opportunities both at the time of the original notice on 30 May 2011 and following the Directions Hearing on 19 October 2011. As late as 3 days prior to the hearing on 25 May 2012, the respondent was of the understanding that there were only 2 applicants.
The objects of the Act can be found at s 4 and they include protecting homeowners from unfair business practices. If the Tribunal finds the respondent has complied with the requirements of the legislation when calculating the site rental it would appear to be within the objects of the Act that the residents have their rental adjusted. Given that this application has been on foot for a considerable length of time, the addition of a large number of extra parties at such a late stage may affect the cost and length of any hearing. Any adverse findings will affect the profitability of the Village in a way that success for the two applicants without the other residents would not.
The respondent is entitled to certainty. The legislative protection given by the fixed period for applications for review should not be taken lightly. There is no material before the Tribunal to adequately explain the need for the other residents to be joined to this existing application rather than lodging a joint application within time. Further there was no attempt to categorize any of these additional persons according to their type of agreement, being market review or 5% p.a. agreement.
The Tribunal has decided that these persons should not be joined to the existing application because they have not complied with the time frames in the notice of increase, the directions of the Tribunal dated 19 October 2011 or the provisions of s 70(2) of the Act which allow them to commence an action in their own names. It is the Tribunal’s view that this decision best achieves the objects of the enabling legislation.
Consideration
Turning then to the substantive issues, the applicants argued vigorously that the increase in site rent was excessive and requested the Tribunal to set aside the increase in site rent. Under the provisions of section 70(2) of the Act, the Tribunal may reduce the amount of the increase, set aside the increase or confirm the increase in site rent. In determining the application the Tribunal may have regard to the matters set out in section 70(3) of the Act and the parties have made reference in their materials and made submissions at the hearing in relation to those matters.
The applicants own and reside in manufactured homes that are located in the Burleigh Town Village, a manufactured home site at 3 Township Drive Burleigh Heads. Under the agreements they have with the owner of Burleigh Town Village, Burleigh Town Village Pty Ltd (ACN 010 799 836), every five years, they are subject to market reviews of the site rent they pay to the owner for use of the land on which their manufactured homes are placed.
Both the applicants and all of the residents received a notice of increase in site rent dated 30 May 2011, which in all cases increased the site rent to $164.50 per week. The previous rents ranged from $148.12-$156.76 per week and therefore the increase amounted to up to $16.50 or 11.12% in some cases.
Burleigh Town Village
The respondent relied on a valuation report dated 1 July 2011 prepared by Mr Laurie J Hamilton, who is a certified practicing valuer. It was prepared on instructions from Burleigh Town Village Pty Ltd.
The report described the Village as follows:
§There are 202 permanent sites within Burleigh Town Village;
§The park area comprises 7.25 hectares;
§The park at the time of inspection was well maintained and presented to a high standard;
§The sites were fully occupied;
§The common amenities blocks are presented to a good standard, are well maintained and were in a good state of repair and state of cleanliness;
§Park facilities include a bowling green, air-conditioned community centre and swimming pool, street lighting and visitor car parking;
§No onsite management is provided.
The applicants take issue with the valuation of Mr Hamilton and point to what they submit are numerous errors and omissions in the report. They submit that it was “patched with incurred conclusions from other parties, and therefore it was not an independently raised report”. They further submit that the directions of the Tribunal on 19 October 2011 were not adhered to or installed.
The relevant directions were as follows:
§That the Respondent is to provide a report from an independent valuer, such report to provide a comparative analysis of site rental fees in comparable residential parks in the locality of the park or, if impractical, for comparable sites in comparable residential parks in comparable localities to the locality the park is in.
The applicants in their submissions allege that section 70(3)(a) was to be enforced within the valuation with reference to “(t)he range of site rents usually charged for comparable sites in comparable residential parks in the locality of the park.”
Material relied on
At the commencement of the hearing the Tribunal was informed that the applicants relied on the following evidence:
§The application filed in the Tribunal on 20 June 2011;
§A document received by the Tribunal on 8 August 2011 from Mr Glen Franklin;
§Other material contained in the Tribunal’s file was not to be relied on.
The respondent relied on the following evidence:
§The notice of increase in site rent under section 69 of the Act dated 30 May 2011;
§The valuation report of Mr Laurie J Hamilton dated 1 July 2011;
§Material filed on 6 September 2011 and 14 April 2012;
§The submissions by the respondent relating to a notice to produce from the applicants dated 13 April 2012.
Following the hearing, the applicants provided written submissions on 7 June 2012 and the respondent provided written submissions on 27 June 2012.
The facts
The relevant facts that the Tribunal has been able to discern from the materials relied on by the parties can be summarized as follows:
§Burleigh Town Village commenced operating in 1986;
§The Village is operated as an over 50’s, owner occupied, long-term residential community;
§Each home occupies a site and the occupancy is protected under the provisions of the Act;
§The original Burleigh Town Village Residency Agreement was issued around 1988;
§In August 1993 a Deed of Variation was arrived at whereby the park owner agreed with the residents that the site fee rental would increase annually by 5% or the increase in the CPI whichever was greater;
§In 2003 the Act was introduced replacing the previous Mobile Homes Act 1993. Regulations provided for a new Form 2 Site Agreement to which special terms could be attached by the park owner;
§In March 2007 a new site agreement was finalized.
§At that time residents were given a choice of 3 options:
o Remain with the original agreement with the annual 5% increase or a CPI(whichever is the greater) rent review;
o Transfer to the new agreement with the same rent review terms; or
o Transfer to the new agreement with an annual rent review to CPI and a market review in July 2011 (and each 5th year after that);
§At the same time a decision was made to charge homeowners for water usage on a metered basis. A reduction in site rent of $14.55 each 4 weeks was negotiated with the Occupier’s Association. A utility notice under section 73 of the Act was given to each home owner;
§The site rental fee adopted in 2007 was accepted by 142 owners. On 1 July 2011 48 residences remained on the original agreement;
§From 2008 all owners received annual notices under section 69 of the Act regarding rent increases to apply for the next period. No owner sought an order to reduce the amount or set aside the increase.
Submissions
The applicants submit that the claim for a rent increase by the respondent should be set aside in its entirety. They argue that the focal points of a site fee increase based on a market review must be in accordance with section 70(3)(a)-(l) of the Act. The respondent submits that the application before the Tribunal should be dismissed.
In summary the applicants submit that the valuation report provided by the respondent consists of inaccuracies, improper comments and absolute not (sic) adherence to the most important section of the Act being section 70(3)(a).
The respondent submits that it was open to the applicants to obtain their own valuation report but chose not to do so. It claims that the valuation provided is conservative given the direct comparison approach adopted by the valuer. It further submits that the valuation complies with the directions by the Tribunal on 19 October 2011.
The applicants also questioned the evidence of Mr Beck at length. They challenged the list of improvements to the Village and submitted that most of these were maintenance and not refurbishments or improvements.
The respondent claims that the submissions by the applicants contain many inaccuracies and misleading statements and include attempts to introduce new evidence that is not otherwise before the Tribunal.
Application of Section 70(3) Factors
Range of site rents in the locality or other comparable localities (section 70(3)(a & b))
Mr Hamilton sets out in his report at pages 11-12 details of section 70 of the Act. Unfortunately the details provided relate to an earlier version of the Act. The Tribunal has reviewed the report bearing in mind the version of the Act that came into effect on 30 January 2012. This oversight has limited the weight that the Tribunal can attach to the report.
This case requires an analysis of the site rent charged for comparable sites in comparable residential parks in the locality of Burleigh Town Village or elsewhere as set out in section 70(3)(a-c). In his report at page 19 Mr Hamilton states that there is no directly comparable park in the locality. He provides 2 tables titled “Rent comparison to other parks" that detail 15 parks that he has considered.
At page 20 he undertakes a summary reconciliation of 4 parks that may be comparable with Burleigh Town Village. He states that the remaining parks are considered to be inferior on a rate per week basis due to their location and quality of improvements. The following table sets out the relevant information:
Name: Apparent weekly rent (p20): Figure from rental comparisons (p19): Golden Crest Manors $145.00 $158.75 Halcyon Waters $152-$167.50 $161.41-$178.51 Riverside Residential Resort $140.00 $149.40 Ruby Gardens $134.00 $142.00 Burleigh Town Village $148.12-$156.76
Of these parks, Mr Hamilton advises that Riverside Residential Resort and Ruby Gardens are the most comparable in regards to facilities, given their age and quality of improvements. However, in his opinion they enjoy inferior locations. Mr Hamilton advises that he considers the direct comparison approach to be the best market supported basis to establish site rents. He concludes that the assessed site rental for Burleigh Town Village is $162.50, which represents an increase of approximately 26% over the past 5 years with the increase in rent from the previous year ranging from 3.7% to 9.7%.
The applicants in their submissions strongly object to this analysis. They submit that numerous other parks such as The Bungalows, Hammond Village and Emerald Gardens both at Coombabah might have been included in the comparison. Each of these parks appear to have considerably lower rates than Burleigh Town Village but there is no independent evidence to support this submission.
The respondent contends in its submissions that the figures proposed by the applicants are not correct. It also submits that the assessment by Mr Hamilton is conservative. The applicants attempted to introduce as part of their submissions a series of photographs with comments apparently taken at the Bungalows and at Burleigh Town Village. The Tribunal has not attached any weight to these photographs.
General trends in rent for residential accommodation in the locality (section 70(3)(c))
Mr Hamilton does not appear to have addressed this criterion. However in the increase notice pursuant to section 69 of the Act, the respondent claims that rents for residential accommodation in the Gold Coast South Region have increased over the previous five years commencing with the March quarter 2006 to the March quarter 2011 as follows:
§1 bed flats/units – 41.17% from $170 to $240
§2 bed flats/units – 24% from $250 to $310
§2 bed townhouses – 22.91% from $240 to $295
The applicants did not contest these figures.
The frequency and amount of past increases in the site rent (section 70(3)(d & e))
All of the site agreements at the Village provide for annual increases depending on the option taken by the individual residents as set out earlier. From 2008 all owners have received annual notices under section 69 of the Act regarding rent increases to apply for the next period. No owner has sought an order to reduce the amount or set aside the increase.
Following the current market review all site rents have been increased. In a document provided by the respondent to the Tribunal on 6 September 2011 the respondent provided a table (BTV4), which sets out a schedule of site fee increases from 2005 to 2011. The table details the CPI increases relied on, the actual dollar amounts to be paid for each year, adjustments for the water rebate in March 2007 and the results of the 5 year market review. It is apparent that for those residents who opted initially for an annual increase of 5%, their payments correlate exactly with the amount proposed by the respondent for the increase based on the market review.
Those residents who opted for the new agreement whereby they agreed to a 4-year CPI increase with a fifth year market review experienced a significant rental advantage up to the time of the market review. The proposed increases for those residents will bring them to parity with the residents who are on the annual 5% increase. For those residents who chose to move to the new agreement after 1 July 2006 the same result will occur. The following table summarises the situation (excluding years 1-3):
| Old agt | New agt | Water rebate | Yr4 | Mkt rev | $ inc | % inc | Inc/wk | Rent/wk | Homes | |
| 1-7-05 | 1-7-06 | 26-3-07 | 1-7-10 | |||||||
| 5% | 5% | 14.55 | 2.5% | |||||||
| CPI + Mkt Rev | 505.15 | 530.40 | 515.85 | 592.50 | 658.40 | 65.90 | 11.12 | 16.48 | 164.60 | 142 |
| Move to CPI 2008 | 505.15 | 530.40 | 515.85 | 601.60 | 658.40 | 56.80 | 9.44 | 14.20 | 164.60 | 6 |
| Move to CPI 2009 | 505.15 | 530.40 | 515.85 | 608.05 | 658.40 | 50.35 | 8.28 | 12.59 | 164.60 | 2 |
| Move to CPI 2010 | 505.15 | 530.40 | 515.85 | 612.15 | 658.40 | 46.25 | 7.56 | 11.56 | 164.60 | 4 |
| 5% annually | 505.15 | 530.40 | 515.85 | 627.05 | 658.40 | 31.35 | 5.00 | 7.84 | 164.60 | 48 |
The Tribunal notes that there may be some slight variances in some of the calculations.
Any increase in the CPI during the previous site rent period (section 70(3)(f))
The details as provided by the respondent identify CPI increases for the period as at 1 July as being:
2007 3.40%
2008 3.90%
2009 4.30%
2010 2.50%The respondent states in the notice of increase that the CPI for Brisbane at December 2010 increased by 3.00%. The CPI increases are consistent with the figures provided by the applicants in their assessment of the gross profits obtained by the respondent over the period.
Amenity or standard of the common areas and communal facilities (section 70(3)(g))
Mr Hamilton stated that at the time of inspection the park was well maintained and presented to a high standard. He said that the sites were fully occupied. Further, the common amenities blocks are presented to a good standard, are well maintained and were in a good state of repair and state of cleanliness at the relevant date of inspection.
He also noted that the park facilities include a bowling green, a community centre and a swimming pool but there is no on-site management. In addition he refers to the internal roads being of a bitumen sealed standard that provide for relatively easy traffic movements with appropriate street signage. Landscaping is provided within a number of cul-de-sacs plus a recently completed roadside entry. He then repeats a list of common facilities but includes street lighting and visitor car parking at the entry and throughout the village. Finally he mentions that there is a covered outdoor area that comes off the community centre and is partly enclosed with tables, chairs and a barbecue.
The applicants in their evidence outline an extensive list of concerns and contradictory details regarding the facilities and condition of the village. In summary the applicants assert that:
“We have:
· No onsite managers
§ No Village bus
§ No refurbishments for 10 years
§ No improvements for 10 years
§ A laughing stock of the industry recreation facility
§ No disabled toilets
§ No other disabled item such as ramps etc.
§ No maintenance to the bowling green estimated at $15,000-00 repairs.
§ No future plans by park owner to do any refurbishments or improvement.”
In answer the respondent contends that it has proven that the amenity and standard of Burleigh Town Village has been well maintained and improved over the last 5 years. They claim there has been no withdrawal of any community facility and additional visitor car parking has been added.
Any withdrawal of a communal facility or service previously provided at the park (section 70(3)(h))
During his cross examination, Mr Beck was asked if any facilities had been removed. It was argued by the applicants that an external barbecue near the swimming pool had been removed and not re-instated. There was also evidence regarding the refurbishment of the community centre and the removal of a fire-place. While the respondent does not specifically address this issue in its submissions, it does state that the applicants' submissions contain many inaccuracies and misleading statements and attempts to introduce new evidence.
Any addition of a communal facility or service not previously provided at the park (section 70(3)(i))
There does not appear to be any evidence regarding the provision of any other community facility or service provided at the park.
Any increase in the park owners operating costs for the park during the previous site rent period (section 70(3)(j))
The respondent gave evidence of a number of increases in “operating costs” that it believes should be taken into account. It submits that Council rates (excluding water and wastewater/sewer) have increased from $12,678 year ended June 2007 to $68,224 year ended June 2011. It submits that this is an increase of 438%. Further the cost increase with respect to wastewater/sewer was from $27,145 to $38,718 over the corresponding period being a 43%.
The respondent provided a table that it argues sets out that only an increase of $28,055 is sought above CPI and other abnormal increases in council and government charges.
Its analysis is as follows:
Annual rent after increase 2011/2012 $1,728,960.00
Annual rent before increase 2010/2011 $1,579,600.00
Gross annual rent increase sought $ 149,360.00
Components of total increase sought:
CPI component based on a non market review year CPI Dec 2010 3% – $47,388
Council rates in excess of CPI – $53,663
Waste water increase – $11,574
Section 99A Electricity Adjustment – $8,680
Balance – Market review component – $28,055.
The applicants raised concerns that the site rent was subsidising other parts of the business. The respondent denies that this is the case but does acknowledge that some expenses are based on an allocation of costs across its entire organization. In particular the applicants challenge the additional amounts claimed for electricity ($8,680) and wastewater ($11,574). They accuse the respondent of engaging in unfair business practices and thereby breaching the objects of the legislation. They also challenge the respondent’s claim to charge for wastewater on the basis of the provisions of the site agreement.
The respondent contends that the submissions and claims by the applicants are based on misunderstandings, “misleading statements and attempts to introduce new evidence… which is not before the Tribunal”.
Whether the increase is fair and equitable in all of the circumstances of the case (section 70(3)(k))
The Tribunal has had regard to the fact that the site rent of all residents has been increased to the same amount and so the impact on some will be more than on others as set out earlier in these reasons. The Tribunal has already determined that this matter only relates to two residents being the applicants. Therefore the fairness of the increase needs to be considered in respect of those two residents who are paying a particular amount of site rent. In this respect the respondent submits that the applicant Mr Franklin was a willing entrant into the village. It submits that Mr Franklin purchased his current home in June 2010 and that at the time he would have had full knowledge of the facilities, amenity, site fees and the 5%p.a. or market review alternatives.
There was no specific evidence regarding the circumstances of the other applicant Mr Caddell.
Anything else that the Tribunal considers relevant (section 70(3)(l))
In the documentation that the applicants sought to rely on in support of their application, the applicants argue stridently in support of the residents of the village regarding the impact of the financial burden that the proposed increase will ensure. They argue that homeowners will suffer both living and financial hardships. They contend that the increase is part of a campaign of greed against those people who can least afford it! The respondent claims that when considering the market review it took into account “net rent paid as a percentage of the aged pension to ensure that the rent maintained parity".
The respondent submits that the Tribunal must also consider the number of new entrants to Burleigh Town Village since July 2011 who have purchased at the current market rent. It is stated that 14 new residents have purchased houses of which 12 are pensioners. The respondent contends that previous decisions of the Tribunal have regarded 3 new entrants as significant. The applicants did not address this issue in their submissions.
Conclusion
There have been no grounds raised which would support an increase in the site rent based on the common areas and facilities of Burleigh Town Village but it would appear that over the course of the last five years that has been an increase in costs to Burleigh Town Village Pty Ltd. While the Village has been well maintained there appears to be only slight increases or deceases to the common areas or facilities as set out above.
Therefore the increase in site rent rests on the agreements, which Burleigh Town Village Pty Ltd has been able to enter with existing residents. None of these agreements have been entered at a site rent of $164.60 prior to the date of the market rent review. That amount is equivalent to the amount expected to be paid by those residents who chose to remain on the annual 5% increase.
The respondent has argued that it has tested the proposed market rent by considering that there are 47 residents on a 5% agreement and 14 new entrants at the current rent. It has taken into account pension affordability and CPI and government charges. It claims that subsequent to the notice of increase dated 30 May 2011 the independent valuation by Mr Hamilton of market rent of $162.50 confirms that the proposed increase is fair and reasonable and an affordable rent for residents.
The site rent set by Burleigh Town Village Pty Ltd of $164.60 is just above the amount proposed by Mr Hamilton of $162.50. The evidence indicates that at least 14 new entrants have accepted that rent. While the Tribunal accepts that some residents will experience an increase of up to 11.12%, the Tribunal has already determined that those residents with the possible exception of Mr Caddell did not avail themselves of the various opportunities to challenge the increase in site rent.
The Tribunal finds that the market review increase is fair and reasonable.
Orders
For the reasons outlined above, the Tribunal makes the following orders:
1.The applications by any persons who sought to be joined in the application of Mr Glen Franklin and Mr Ronald James Caddell dated 16 June 2011 are dismissed.
2.The application of Mr Glen Franklin and Mr Ronald James Caddell is dismissed and the increase in site fee is confirmed.
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