M & T Entriken Pty Ltd v Nicholson
[2014] QCATA 182
•16 July 2014
| CITATION: | M & T Entriken Pty Ltd v Nicholson & Ors [2014] QCATA 182 |
| PARTIES: | M & T Entriken Pty Ltd t/as M&T Entriken Trading Trust (Applicant/Appellant) |
| v | |
| Alexander Archibald Nicholson, Col Barrett, M Moore, K Fear, J Gooding, Estate of Alan Pedwell, David George Swire, J Swire, K Cob, Ronald Norman Brooks, B Johnson, S Baker, J Petersen, J Ball, U Ball, K Hearl, M Appo, L Appo, N Best, M Best, B Jeffery, S Jeffery, E Nielsen, H Vievers, J Vievers, R Just, R Just, E Edwards, C Thomas, R Brooks, P Brooks, M Jones, B Cob, L Webb, R Benges, D Benges, R Hardingham, M Ellis, G Tremble, C Williams, A Parker, J Rolls, S Rolls, H Moore, N Fear, A Knowles, K Nicholson, V Dutton, R Hansen, C Hansen, M Miller, R Fernandes, B Cugley, M Cugley, B Barnfield, M Barnfield, M Moles, A Mills, J Mills, A Webster, M Webster, J Armstrong, J Armstrong, M Bradley, D Bradley, E Danvers, L Danvers, F Reid, J Reid, K McKenzie, J Cebular, M McDonald, J McDonald (Respondents) |
| APPLICATION NUMBER: | APL309-13 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Senior Member Stilgoe, OAM Dr Cullen, Member |
| DELIVERED ON: | 16 July 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. Leave to appeal granted. 2. The parties are directed to attend a Directions Hearing in APL309-13 at 9:30am on 30 July 2014 |
| CATCHWORDS: | APPEAL – LEAVE TO APPEAL – MANUFACTURED HOMES SITE RENT INCREASE DISPUTE – whether grounds for leave to appeal – leave to appeal granted Manufactured Homes (Residential Parks) Act 2003 (Qld), s 69, s 70(3), s 72 Fox v Percy (2003) 214 CLR 118 R v War Pensions Entitlement Appeal Tribunal (1933) 50 CLR 228 Dearman v Dearman (1908) 7 CLR 549 at 561 Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 Gentry & Ors v Surtie Enterprises Pty Ltd trading as Greenbank Gardens (No 3) [2010] QCAT 254 Lucadoe-Wells v Emmetlow Pty Ltd [2005] MH024-04 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
SENIOR MEMBER STILGOE
M & T Entriken Pty Ltd operates Hazelmere Village, a manufactured home park at Hervey Bay. The respondents are residents in the Village.
In August 2012, Entriken sent a notice to residents advising that the site rental was reviewed to market. Entriken advised that, from 4 October 2012 (“Increase Day”), the site rent increased from $142 per week to $160 per week.
The respondents applied to the tribunal for a review of the site rental increase. On 20 June 2013, the tribunal ordered that the site rental be set at $147 per week.
Entriken wants to appeal that decision. It says the learned Member erred in his consideration of the Village’s decommissioned bowling green. It says the learned Member erred in his analysis of the site rents for comparable sites. It says the learned Member erred in preferring the evidence of Mr Rutledge to the evidence of Messrs Gees and Brown. It says the learned Member erred in not accepting the evidence of Messrs Gees and Brown or Mr Mobbs. It says the learned Member erred in his analysis of the park amenity. It says the learned Member erred in his analysis of the Village’s increased operating costs.
Because this is an appeal on mixed fact and law, leave is necessary. The principles the appeals tribunal applies when considering an application for leave to appeal are as summarised by Keane JA (as His Honour then was) in Pickering v McArthur:[1]
There are numerous authorities, in varying language but with unvarying emphasis, that leave to appeal will usually be granted where there is a reasonable argument that the decision is attended by error, and an appeal is necessary to correct a substantial injustice to the applicant caused by that error.
[1][2005] QCA 294 at [3].
Fresh evidence
Entriken has filed fresh evidence with its submissions to the appeals tribunal. Mr Brown has filed an affidavit seeking to correct an error in his report. He says that he recorded the site rent for Sugar Coast Village as $139.65 per week inclusive of GST whereas it was exclusive of GST. He says that the site rent inclusive of GST is, in fact, $147.33 per week.
The appeals tribunal will only accept fresh evidence if it was not reasonably available at the time the proceeding was heard and determined. Ordinarily, an applicant for leave to adduce such evidence must satisfy three tests. Could Entriken have obtained the evidence with reasonable diligence for use at the trial? If allowed, would the evidence probably have an important impact on the result of the case? Is the evidence credible?[2]
[2]Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 at 408.
Mr Brown has explained his error but he has not provided any independent evidence (e.g. from Sugar Coast itself) to demonstrate his error. Oddly, the reports from both Mr Rutledge and Mr Gees record $139.65 as the weekly rent for Sugar Coast. The appeals tribunal has not received affidavits from them, saying that their reports are in error. In the absence of some supporting statement from Sugar Coast, or Messrs Rutledge and Gee, Mr Brown’s fresh evidence is not credible and should not be admitted.
THE APPLICATION FOR LEAVE TO APPEAL
The bowling green
The learned Member reduced the site rental because the bowling green was not operational. Entriken submits the learned Member should have assessed the site rent with the bowling green, and then reduced it for so long as the green was decommissioned.
The learned Member’s reasons for decision are contradictory. He refused to make an order under s 72 of the Act for a reduction in site rent due to a reduction in amenity because the respondents had made no such application.[3] He proceeded on the basis that the green was in a state of disrepair but not removed.[4] But he also proceeded on the basis that the green was decommissioned, was not available as a community facility and the site rent should reflect that.
[3]Alexander Nicholson, David Swire and Ronald Brooks v M & T Entriken Pty Ltd trading as M & T Entriken Property Trust [2013] QCAT 716 at [16].
[4]Ibid at [17].
The bowling green was operational when Entriken notified the respondents of the site rent increase. It was vandalised in October 2012, after the respondents filed their application for review. It was useable until 29 October 2012. Entriken was trying to repair the green, even though part of it encroached onto Council land and Council sewer pipes run under, or close to, the land. However, the Council gave Entriken a permit to use the land until July 2015.
On 15 April 2013, Entriken advised residents that it was going to replace the green with a tennis court. The residents took up a petition in opposition. It was not until the hearing on 3 May, that Entriken indicated that it would not reinstate the green, nor would it build a tennis court,[5] but would accept a rent reduction instead.
[5]Transcript page 1-44, line 16 to page 1-45, line 12.
Entriken says the learned Member erred in considering the events after Increase Day. It says that these events can be considered in the next review to market, but not in this review. It also says the learned Member’s approach is inconsistent; he accepted these matters as relevant but refused to consider other events that occurred, or were about to occur, after Increase Day.
Section 70(3) of the Manufactured Homes (Residential Parks) Act 2003 (Qld) is past-focussed. The word ‘previous’ occurs in ss 70(3)(d), (e), (f), (h), (i) and (j). The starting point for the tribunal must be the fact and circumstances that existed as at Increase Day. The green was operational on Increase Day.
Even though Entriken indicated that the green would be decommissioned, the respondents expressed a preference for some sort of facility to be retained.[6] Both sides agree that the green has now been restored. The learned Member erred in treating the green as a permanent reduction in amenity, and reducing the rent permanently.
[6]Transcript page 1-47, line 7 to page 1-48, line 6.
The tribunal looked at a similar situation in Gentry & Ors v Surtie Enterprises Pty Ltd trading as Greenbank Gardens (No 3).[7] In that case, the residents applied for a review of the site rent. The bowling green was damaged by flooding. The tribunal accepted the park owner’s submission that it had acted reasonably in the reinstatement of the bowling green.[8] The tribunal did not order any reduction in rent for the period that the green was not available.
[7][2010] QCAT 254.
[8]Ibid at [14].
Entriken submits, and the respondents now accept, that the bowling green is now operating. Even though this is fresh evidence, it was not available at the time of the hearing, is important to the result of the case, and is credible. It should be admitted.
The respondents now concede that a site rent decrease of $1.30 was reasonable only for the period the bowling green was not available.
Analysis of site rent for comparable parks
Entriken submits the learned Member erred in his findings Torquay Waters was a superior park and that Noble Lakeside was a comparable park.
A summary of the experts’ reports about these parks is as follows:
Torquay Waters
Noble Lakeside
Hazelmere Village
Site rent
$149.10
$152.75
$142.00
Mr Brown
Inferior
Cannot compare
Mr Gees
Comparable
Cannot compare
Mr Rutledge
Superior
Superior
The learned Member accepted Mr Rutledge’s evidence that Torquay Waters was a superior park.[9] Entriken says this finding was against the evidence.
[9]Ibid at [30].
The appeal tribunal will not usually disturb findings of fact on appeal if the evidence is capable of supporting the conclusions.[10] An appellate tribunal may interfere if the conclusion is ‘contrary to compelling inferences’ in the case.[11]
[10]Dearman v Dearman (1908) 7 CLR 549 at 561; Fox v Percy (2003) 214 CLR 118 at 125-126.
[11]Chambers v Jobling (1986) 7 NSWLR 1 at 10.
The learned Member does not explain why he preferred Mr Rutledge.
Mr Gee gave sworn evidence that Torquay Waters did not have the same facilities as Hazelmere Village.[12] In his opinion, Hazelmere Village offered ‘barely more’ than Torquay Waters.[13] Mr Brown gave sworn evidence that Hazelmere Village offered more facilities than Torquay Waters.[14] Mr Rutledge accepted that Hazelmere Village had more facilities than Torquay Waters[15] but told the learned Member he thought Torquay Waters was superior because of its location, presentation size and security.[16]
[12]Transcript page 1-28 lines 21-28.
[13]Ibid page 1-28, line 31-32.
[14]Ibid page 1-37, lines 21-25.
[15]Ibid page 1-71, line 1 to page 1-72, line 4.
[16]Ibid page 1-72, lines 4-12.
Apart from location, what Mr Rutledge saw as advantages, Mr Gee saw as disadvantages.[17] The weight of the evidence before the learned Member did not support a finding that Torquay Gardens was a superior facility.
[17]Ibid page 1-28, lines 19-28.
Mr Rutledge’s evidence has other difficulties. In a proceeding that the learned Member acknowledged was unusual,[18] Mr Rutledge was allowed to ask questions of Mr Brown. The transcript records this, correctly in view, as ‘cross-examination’. Mr Rutledge did not have a similar right to question Mr Gees and neither Ms Gees nor Mr Brown had a right to cross-examine Mr Rutledge. It is clear that Mr Rutledge acted as an advocate, rather than an expert. He spoke to the issue[19] rather than ask questions of Mr Brown. He referred to matters discussed at mediation in a different matter before the tribunal.[20] Mr Rutledge demonstrated a lack of independence in his conduct before the tribunal. For this reason, his evidence should be discounted. The learned Member erred in preferring Mr Rutledge’s evidence that Torquay Gardens was a superior facility.
[18]Ibid page 1-30, lines 33-35.
[19]Ibid page 1-49, lines 33-38; page 1-50, lines 9-26.
[20]Ibid page 1-49, lines 33-45.
For the same reason, Mr Rutledge’s view of Noble Lakeside should not be accepted in the face of two other experts who assert that the facility is not ‘comparable’ to Hazelmere Village.
Site size
Entriken submits that the learned Member made no reference to site size in his decision, even though it is a matter the tribunal is required to consider in making a decision.[21] Entriken relies on the comments of Member Gallagher of the former Commercial and Consumer Tribunal in The Residents of Gateway Village Resort v Haraba Pty Ltd.[22]
[21]Section 70(3)(a).
[22][2005] CCT M006-04 at [55].
The table on page 3 of Mr Gees’ report dated 30 November 2012 demonstrates that there are differences in site size. The learned Member was obliged to consider this in making his decision.
Future market reviews
The learned Member refused to speculate on the outcome of a proposed market review for Sugar Coast.[23] In its submissions, Entriken acknowledged that the tribunal can only look at events up to Increase Day. Indeed, that was the basis of its submission about the bowling green. However, Entriken submits that the learned Member must consider the evidence in context and that, necessarily, means that he had to consider what market reviews were likely in the near future.
[23][2010] QCAT 254 at [34] to [35].
Entriken goes on to inform the appeals tribunal of the results of Golden Shores’ rent review, which occurred after the learned Member’s decision. If Entriken wants the appeals tribunal to take that submission as fresh evidence, it should provide some independent evidence to that effect. It should not try to introduce new evidence by sleight of hand.
The cases Entriken cites do support a submission that the learned Member should make his decision in context. They do not support the submission that the learned Member should speculate about the results of an upcoming market review in another park. The only thing that the learned Member could infer from that information is that the comparable parks may be at different stages of the cycle of increasing site rent. I do not accept that the learned Member was in error in refusing to accept a quantitative analysis of a review to market for another park at some time in the future.
The expert valuers’ evidence
The learned Member accepted evidence from three ‘expert’ valuers. Regrettably, the expert evidence before the learned Member did not comply with Practice Direction 4 of 2009. Entriken filed two expert valuer reports, contrary to paragraph 2 of the Practice Direction. There was no expert conclave, as required by paragraph 5 of the Practice Direction. There was no joint report, as required by paragraph 8. All of the expert reports refer to facts – such as the site rent at other facilities – without stating the source of those facts. All of the reports refer to assumptions, without detailing the source of the assumptions. The learned Member’s task would have been much easier if the Practice Directions had been followed.
In conducting a proceeding, the tribunal must act fairly and according to the substantial merits of the case. It is not bound by the rules of evidence and may inform itself in any way it considers appropriate.[24] Whilst that does not mean that the rules of evidence can be ignored,[25] it does allow the tribunal, in appropriate cases, to receive evidence which may not be admissible in a court as expert evidence.[26]
[24]QCAT Act s 28(1).
[25]R v War Pensions Entitlement Appeal Tribunal (1933) 50 CLR 228 at 256 per Evatt J.
[26]Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [80] per Heydon JA, as His Honour then was.
While the comparison of site rents and facilities offered in manufactured home parks is not something that requires a specialised field of expert knowledge, the fact remains that certain valuers have developed a career by providing precisely that type of evidence. Although flawed by a failure to comply with the Practice Directions, the evidence did assist the learned Member in his deliberations and he was entitled to receive the evidence contained in the reports and treat it as expert opinion.
For the reasons I have already expressed, I find the learned Member was in error in accepting Mr Rutledge’s evidence in preference to the evidence of Mr Brown or Mr Gees.
Mr Mobbs’ evidence
The learned Member was obliged to consider any increase in Entriken’s operating costs during the previous site rent period.[27] Entriken submits that the only evidence available was Mr Mobbs and Exhibit A. However, the transcript shows the respondents also gave evidence on this point.
[27]Section 70(3)(j).
The learned Member preferred the respondents’ evidence. The learned Member heard sworn evidence from Mr Brooks, and Mr and Mrs Swire. Mr and Mrs Swire did not give any evidence about the operating costs. Mr Brooks’ evidence is limited to submissions about the percentage rise of pensions between 2004 and 2012 compared with CPI.[28] As Entriken points out in its submissions to the appeals tribunal, Mr Mobbs’ evidence was unchallenged. The learned Member noted that the respondents did not have access to the Entriken‘s financial records and did not have an expert accounting report.[29] He said that ‘given the serious financial ramifications to the owner there is greater incentive for the owner to resource the litigation’.[30] I agree with the learned Member and I find that Entriken met that incentive by providing Mr Mobbs’ report. The learned Member cannot be suggesting that Entriken owed a duty to the respondents to assist them in proving their case.
[28]Transcript, page 1-97 lines 24-42.
[29]Supra at [67], [69].
[30]Ibid at [69].
The obligation to ensure that a party understands the case it has to meet lies with the tribunal.[31] The tribunal often meets this obligation through a compulsory conference in which the presiding member should assist the parties to identify and clarify the issues in dispute and identify the questions of fact and law to be decided by the tribunal. This dispute went to a five-hour compulsory conference. If the respondents did not understand the evidence they had to produce to the tribunal, it was not for the want of trying by the tribunal.
[31]QCAT Act s 29.
The tribunal often compels production of sensitive financial material in ways that will safeguard the park owner yet allows residents to test the truth of budgets and financial projections. The respondents did not ask for this material. The learned Member cannot criticise Entriken for failing to provide it.
Even if Mr Mobbs was not truly an independent expert, the learned Member erred in rejecting his evidence in favour of the respondents’ submissions that were not supported by evidence.
Because the learned Member did not accept Mr Mobbs’ evidence, he also did not accept, or refer to, the costs of capital improvements during the previous site rent period. Further, the learned Member did not consider the provision of services at Hazelmere Village during the previous site rent period.
What is the ‘previous site rent period’?
The learned Member found that ‘previous site rent period’ meant the period from the last CPI increase; that is, October 2011.[32] In its submissions to the appeals tribunal, Entriken refers to a string of decisions in which the tribunal defines ‘previous site rent period’ as the period between market reviews.[33] The learned Member erred in confining his analysis of increased costs to the last twelve months if that is what he did. I note the learned Member did consider increases in expenses from 2010[34] and did give Entriken an increase of $2 per week to cover the increase in expenses.[35]
Fair and equitable
[32]Supra at [59].
[33]See, for example, Lucadoe-Wells v Emmetlow Pty Ltd [2005] MH024-04 at [44].
[34]Supra at [65].
[35]Ibid at [75].
The learned Member was not required to consider every matter raised in s 70(3) of the Manufactured Homes (Residential Parks) Act but, if he did, he must give reasons.
The learned Member’s reasons do not reveal whether he considered if the increases were fair and equitable. He found that the respondents are likely to be older citizens and were less able to fund an expert report[36] but he does not specifically link these findings to the concept of fair and equitable, nor does he make any findings about the respondents’ capacity to absorb the proposed increase.
[36]Ibid at [69].
Entriken did provide evidence about affordability, including Mr Mobbs’ report. The learned Member should have addressed the issue in his reasons.
Conclusion
The learned Member did err in his deliberations. The errors sufficiently affect the learned Member’s decision that leave to appeal should be granted.
The appeals tribunal must decide the appeal by way of rehearing, with or without additional evidence.[37] In deciding the appeal, I can confirm or amend the learned Member’s decision, or set it aside and substitute my own decision.[38]
[37]QCAT Act s 147(2).
[38]Ibid s 147(3).
Entriken has indicated that it consents to the appeals tribunal deciding the appeal on the papers. The respondents have not addressed this point.
Given Entriken filed fresh evidence with its application for leave to appeal, which I did not admit for the purpose of the application for leave to appeal, I consider it appropriate to allow the parties to address the appeals tribunal about whether or not they wish to file fresh evidence. Accordingly, I direct the appeal be listed for a directions hearing on a date to be advised.
MEMBER CULLEN
In this matter, I have had the benefit of reading Senior Member Stilgoe’s reasons in draft. I agree with her reasons, and conclusions, and the order she proposes.
Expert Witnesses in the Tribunal
M&T Entriken sought to rely upon a report prepared by Mr Jamie Mobbs, a certified practising accountant. I agree with Senior Member Stilgoe that the learned Member should have considered his evidence. However, I do not accept that Mr Mobbs is an “expert witness” as contemplated by Practice Direction 4 of 2009. In this respect, I note that the learned Member articulates some of these concerns at paragraph 64 of his decision. Statements made by experts that are in the nature of submissions more appropriate for advocates or the parties themselves, will naturally reduce the weight that the Tribunal can attach to that evidence.
Regardless of the partisan nature of Mr Mobbs’ evidence in some respects, it should have been considered, and whatever weight appropriate afforded to it. In the absence of any contradictory, more reliable evidence, rejecting Mr Mobbs’ evidence in totality is in error.
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