Hall v Bremer Waters Pty Ltd (No 2)
[2010] QCAT 504
•11 October 2010
| CITATION: | Hall v Bremer Waters Pty Ltd (No 2) [2010] QCAT 504 |
| PARTIES: | Geoffrey Hall and certain other residents of Bremer Waters Lifestyle Resort |
| v | |
| Bremer Waters Pty Ltd |
| APPLICATION NUMBER: | RWL001-10 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | 13 July 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | Ms M Howard |
| DELIVERED ON: | 11 October 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. That the site rent calculation be set aside. 2. That the site rental per week from 25 June 2009 is $117.82. 3. Bremer Waters Pty Ltd shall refund to the applicants any overpayment of site rent as a result of the recalculation in accordance with order 2. 4. That Bremer Waters Pty Ltd provide to residents with notification of future CPI rent increases a copy of the detailed calculations undertaken to calculate the increase. |
| CATCHWORDS : | Manufactured Homes (Residential Parks) Act 2003 - s 69- calculation of variation of site rent- interpretation of site agreement -components 'y' and 'x' in the rental increase formula - application for renewal |
APPEARANCES and REPRESENTATION:
| APPLICANT: | Mr G Hall representing the applicants |
| RESPONDENT: | Mr Stan Moore representing the respondent |
REASONS FOR DECISION
Background of Application
On 20 January 2010, the Queensland Civil and Administrative Tribunal determined an application under the Manufactured Homes (Residential Parks) Act 2003 made by the applicants regarding a notice of site rent increase delivered to residents by Bremer Waters Pty Ltd (Bremer Waters). Bremer Waters is a residential park under that Act. However, only some of the land owned by the respondents has been developed and forms part of the residential park. The owner has been incrementally developing the rest of the area (referred to as the development site) into residential park.
At the time of that determination, the issues essentially related to the determination of the value to be used as Y in the application of the formula prescribed under the site agreement for CPI rent reviews. Y is relevant under the site agreement to the apportionment amongst home owners of increases in the amount of site rent payable for increases in local government charges. Under the site agreement, in a CPI rent review, rent may be increased by applying the formula, R x C + (X/Y) + (Z/Y), where:
R is the site rent paid in the previous year;
X is the increase in local government charges;
Z is the increase in land tax;
Y is the total number of sites in the park; and
C is the percentage increase in CPI for the preceding year.
In its decision, the Tribunal determined that Y is 138.
When making its decision, the Tribunal considered that the value used by the respondent as X must be incorrect. It came to this conclusion because the figure used represented the whole of the increase in local government charges for the entire area, whereas only that portion of the increases referable to the residential park, as defined in the Manufactured Homes (Residential Parks) Act 2003, as opposed to the development site, could be included in X.
The Tribunal delivered written reasons for decision and made orders as follows:
[1] That the site rent calculation notified on 26 May 2009 be set aside.
[2] That Bremer Waters Pty Ltd recalculate the site rent to be applied from 25 June 2009 using the formula in the site agreement; in particular X shall be the amount of the increase in local government charges referable to the residential park, but excluding those referable to the development site.
[3] That Bremer Waters Pty Ltd provide the applicants with a copy of the calculations undertaken in accordance with order 2 within 28 days of this order.
[4] Bremer Waters Pty Ltd shall refund the applicants any overpayment of the site rent as a result of the recalculation in accordance with Order 2.
[5] That Bremer Waters Pty Ltd provide to residents with notification of future CPI rent increases a copy of the detailed calculations undertaken to calculate the increase.
Subsequent to the Tribunal’s order of 20 January 2010, the respondent wrote to the residents of Bremer Waters advising that water usage had been recalculated as required by the Tribunal’s order and that usage not attributable to the rental increase was $27.29 for the year. When this amount was divided by 52 weeks and divided by the number of residents, namely 138, and rounded to 4 decimal points, it came to $0.0038. On that basis, no adjustment to the rental increase was considered necessary or made.
On 5 March 2010, the applicants filed an application for renewal under the Queensland Civil and Administrative Tribunal Act 2009 (the QCAT Act) on the basis that the respondent had not complied with the Tribunal’s orders. The applicants seek orders that the calculations done by the respondent following the Tribunal’s orders be set aside and that rent be set at $114.11 per week. The respondent seeks orders that the application be dismissed.
The Evidence and the Calculations
At the hearing of the renewal application, the parties agreed that the only issue for determination by the Tribunal is the value of X, namely the increase in local government charges which may be included in the calculation.
The applicants relied on calculations done by an applicant, William Basely, a Fellow of the Chartered Institute of Management Accountants. The respondents relied upon calculations done by John Hauenstein, a practising accountant. Both Mr Basely and Mr Hauenstein gave oral evidence at the hearing.
The calculations provided reveal that the parties agree that the total increase in local government charges, (less the amount for increases in metered water consumption charged directly to residents which are therefore irrelevant to the calculations) is $35460.83.
The applicants contend that the increase in local government charges referable to the residential park is $8465.29 as opposed to the portion referable to the development site which they calculate $26995.54. This amount includes the $27.29 for water charges referred to by the respondent in their calculations, as well as $6930 for waste (wheelie bin) charges and $20038.25 for sewerage charges.
Mr Basely prepared some complex tables setting out the basis on which the applicants argue that the bulk of the increase in waste charges and sewerage charges are increases referable to the development site, rather than the residential park. In each case, the argument was essentially that because of the ongoing development of sites by the respondents, the number of services for sewerage and waste (wheelie bin) charges had increased over the year, and that the full cost of the service per year could not legitimately be included in X, as it was largely a development cost.
His calculations were prepared on the basis that only the amount of the increase per individual service charged, namely $10 per annum for waste charges, and $19 per annum for sewerage charges, multiplied by the number of services charged by the local authority according to the rate notice at 30 June 2009, in each case 120 services, could be included as part of X. The net effect of this complicated calculation is that on the applicants’ case, from an agreed increase in local government charges of $8130 for waste charges, only $1200 would be included in X; and in the case of an agreed increase of $20,038.25 for sewerage charges, only $2280 would be included in X.
Mr Basely explained that in preparing his calculations he sought to apply three principles. These were in essence, transparency, fairness and simplicity.
Mr Hauenstein considered that an apportionment for waste charges was inappropriate because numbers of wheelie bin services charged was adjusted by Council each six months and therefore charges were only incurred some time after sites had actually begun receiving the service. Accordingly, he said that there was a period during which the service was not charged to residents until the next adjustment was made to the number of services charged. He stated that all rubbish and waste from the development site was handled by a contractor, at a cost of $35,260 to the park developers, and was not charged by the local government authority. Accordingly, he considered the entire amount of increase for waste charges a charge referable to the residential park and entirely applicable to the home owners.
Regarding sewerage charges, Mr Hauenstein again considered that there was not a basis to apportion the amount of the increase between the residential park and the development site. He stated that sewerage costs were not charged until after the final inspection following completion of construction and therefore, that all sewerage charges relate to residents. He gave evidence that tradespeople could not use toilets in a constructed home and that portaloos were provided for their use at a separate cost to the park developers.
Mr Hauenstein calculated that the only adjustment to be made from the total amount of increase in local government charges in compliance with the tribunal’s order of 20 January 2010, was to exclude $27.29 being the increase in water charges used in the construction of the of sites during the year. As the water charges were unmetered, the calculation relied upon estimates of water consumption per constructed home of 3.960 kilolitres per house. This estimate was said to be based on the advice of the project manager and construction supervisor. For 2007/2008, total water used for home construction (for 46 homes) and sales office use was estimated at a total of 200,360 litres (at a cost $1.75 kilolitre) of $350.63. For 2008/2009, total water used for home construction (for 40 homes) and sales office use was 176,600 (at a cost $2.14 kilolitre) of $377.92. The applicants’ calculations include an adjustment for this item.
The calculations of both parties include a calculation of the rental increase. Both nominate the weekly site rental for the previous year at $109.53 and the CPI increase for the previous year at 3.10%.
Discussion and Decision
The applicants submit that the respondent’s calculations take a narrow view of X and that those calculations ignore other components. They argue that Mr Basely’s calculations represent a fair and equitable method of calculating X in accordance with the Tribunal’s orders of 20 January 2010, and that the additional rental received by the respondents from the renting of the forty new homes constructed in the period should cover what they contend are the total development costs related to the increased water, sewerage and waste charges.
The respondent submits that the increase in waste and sewerage charges cannot reasonably be considered referable to the development site for the reasons Mr Hauenstein explained. They argue that the formula for site rent increase must be applied to the residential park, rather than to individual sites. The formula is to be taken as a whole, and it contains X which then apportions the charges between individual sites. They argued that transparency and fairness was provided by the inclusion of the formula in the site agreement. Further, the respondent submitted that the applicants’ calculations, by introducing a calculation based upon the number of additional services into the calculations about waste and sewerage costs, adds a degree of complexity whereas their own calculations took a simple approach.
I have previously found that the number of sites for use in the calculation is 138. The calculations proposed by the applicants seek to introduce reference to the number of services charged at a point in time, which differs from the number of sites. Apart from introducing a significant degree of complexity, this in effect seeks to distort the value used as Y which the parties agreed upon in the site rent agreement.
Further, in relation to the increase in local government charges for waste services, the tribunal accepts the undisputed evidence of Mr Hauenstein that the charges are only imposed once a service is received, and the number of services is adjusted periodically by the local authority. It is reasonable to infer and I do draw the inference that the charges are imposed once the development of the individual site is complete and the premises have reached the stage that they are available for rent under a site agreement. The effect of this is that the charges can only be referable to the residential park and not the development site.
Similarly, regarding the increase in sewerage charges, the unchallenged evidence of Mr Hauenstein is that the charge only commences once construction has been completed and the service is being provided to a site. Again, it is reasonable to infer and I do draw the inference that the charges are imposed once the development of the individual site is complete and the premises have reached the stage that they are available for rent under a site agreement.
The effect is that the total of those charges, for waste charges $8130, and for sewerage charges $22318.25, are referable to the residential park. Accordingly, I do not accept that there is a basis for these amounts or any portion of them to be excluded from X.
Regarding the water charge adjustment to X of $27.29, I consider there is an error in the calculation. X is the amount of the increase in local government charges referable to the residential park but excluding those charges referable to the development site. The calculation which has been done to arrive at the amount of $27.29, is the difference between estimates of unmetered water used in the construction of homes in the 2007-2008 year of $350.63 in comparison with the 2008-2009 year of $377.92. However, the whole of the water charges of $377.92 are referable to the development site, not the residential park. The estimated increase in the 2008-2009 year is irrelevant. Therefore, there is not a basis to include any of the water charges of $377.92 in X. Accordingly, this amount must be deducted from the increase in local government charges of $35460.83 to ascertain X.
The applicants did not suggest that the various other components of the increase in local government charges were not properly included in X. Accordingly, I have not considered them. The value of X may therefore be ascertained by subtracting $377.92 from $35460.83, namely $35082.91.
Using the values agreed by the parties for the other components of the formula, the weekly site rental increase from 25 June 2009 may be calculated as follows:
R is the site rent paid in the previous year, namely $109.53;
X is the increase in local government charges, namely $35082.91/52
= $674.67;
Z is the increase in land tax, no value nominated;
Y is the total number of sites in the park, namely 138; andC is the percentage increase in CPI for the preceding year, namely 3.10%.
Then R x C + (X/Y) + (Z/Y) is as follows:
$109.53 x 3.10% + ($674.67/138) is $3.40 + $4.89 which equals $8.29.
The new rental per week is therefore, $109.53 plus the increase of $8.29 per week, or $117.82.
Orders
- That the site rent calculation be set aside.
- That the site rental per week from 25 June 2009 is $117.82.
- Bremer Waters Pty Ltd shall refund to the applicants any overpayment of site rent as a result of the recalculation in accordance with order 2.
- That Bremer Waters Pty Ltd provide to residents with notification of future CPI rent increases a copy of the detailed calculations undertaken to calculate the increase.
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