Pine Needles Village Pty Ltd v Dryden
[2002] NSWSC 263
•5 April 2002
Reported Decision:
119 LGERA 430
54 NSWLR 577
(2003) NSW ConvR 56-041
New South Wales
Supreme Court
CITATION: PINE NEEDLES VILLAGE PTY LTD v DRYDEN & ORS [2002] NSWSC 263 CURRENT JURISDICTION: Common Law Division
Administrative Law ListFILE NUMBER(S): SC 30041/00 HEARING DATE(S): 9 July 2001 JUDGMENT DATE: 5 April 2002 PARTIES :
Pine Needles Village Pty Limited (Plaintiff)v
Patricia Dryden (First Defendant)
Residential Tribunal (Second Defendant)
Tenancy Commissioner (Third Defendant)JUDGMENT OF: Adams J at 1
LOWER COURT
JURISDICTION :Residential Tribunal LOWER COURT
FILE NUMBER(S) :LOWER COURT
JUDICIAL OFFICER :
COUNSEL : Mr Wales SC (Plaintiff)
Ms J Needham (First Defendant)
Mr J Trebeck (Third Defendant)SOLICITORS: Kemp Strang (Plaintiff)
Kim Cull (First Defendant)
I V Knight (Second Defendant)
C L Pacey (Third Defendant)CATCHWORDS: Residential Parks Act 1998 - Meaning of "exscess water charge" and "water consumption charge" - whether owner can pass on excess water charge to resident. LEGISLATION CITED: Residential Parks Act 1998 DECISION: Appeal dismissed with costs.
IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION/
ADMINISTRATIVE LAW listADAMS J
FRIDAY 5 APRIL 2002
PINE NEEDLES VILLAGE PTY LTD v PATRICIA DRYDEN & ORS30041/00
JUDGMENT
1 HIS HONOUR: The first defendant, Mrs Dryden, is a resident of Pine Needles Village (the village), which is operated by the plaintiff. The village is a Residential Park within the meaning of s 3(d) of the Residential Parks Act 1998 (the Act; all legislative references are to this Act) in that it is a “manufactured home estate” rather than a “caravan park” in the traditional sense. The plaintiff rents to the defendant a manufactured home on a site in the “estate”. Services such as electricity, sewerage and, relevantly, water, are connected to the home.
2 A number of the residents of the estate sought orders from the Residential Tribunal for repayment of water usage charges that had been imposed by the plaintiff on them. Mrs Dryden is a representative defendant on behalf of each of these residents. So far as is presently relevant, the residential site agreement (the agreement) between the residents and the plaintiff provides –
“4. The Landlord agrees to pay: -
…
4.2 For water, other than water that the resident has agreed to pay for under Clauses 5.3 and 5.4 of this agreement …
5. The Tenant agrees to pay…
- …
- 5.3 for excess water used during the term of this Agreement if the site is individually metered and
- 5.4 any other charge for water set out in the additional terms of this Agreement if the site is individually metered. The charge for water is calculated according to the metered amount of water consumed and there is no minimal rate chargeable …
- Additional terms …
- 5.9 the resident agrees to pay for all water used during the term of the agreement (in addition to any excess water charge which the Tenant has agreed to pay under s 5.3) where the dwelling or premises is individually metered, the charge for water is calculated according to the metered amount of water consumed and there is no minimum rate chargeable.”
3 The plaintiff pays Gosford City Council, which is the “water supply authority”, a water rate comprising a fixed initial charge and an amount calculated by reference to the quantity of water supplied in excess of 200 kilolitres. It has installed water meters for each site it owns. It is agreed that these meters comply with regulatory requirements. The defendants have been charged by the plaintiff, in accordance with their agreements, for water at the same rate of cents per kilolitre as is paid by the plaintiff to the Council for excess water. The Residential Tribunal found that the residents were not liable to pay the water usage charges imposed by the plaintiff and ordered that the sums paid should be refunded.
4 The Act regulates the terms of agreements between park owners and residents for occupation of residential premises on a residential park. Regulations under the Act prescribe a standard form for such agreements. All agreements must be in or to the effect of the form and, with some exceptions, an agreement is void to the extent to which it does not comply with this requirement (ss 9 and 10). So far as this appeal is concerned, a term as to liability for water charges is prescribed by the Act and thus governs the obligations of the parties without regard to the specific terms of the agreement.
5 The background to this litigation is the change in the way in which water consumption has been charged in New South Wales. Some time ago, the invariable system was that a municipal council rate or the Sydney Water Board rate was paid by the property owner, comprising an annual rate or fixed charge which covered the supply of a specified quantity of water plus an additional sum for water supplied in excess of that quantity (the excess water scheme). Over time and in most areas of New South Wales, this system was replaced by one in which the cost of water supplied is referable directly to the quantity used (the quantity cost scheme).
6 So far as permanent residents in caravan parks are concerned, caravan park owners typically have installed their own water meters which measure the consumption of each such resident. The question is whether, in this case, the caravan park owner is entitled to bill the residents for that consumption. It is not in issue that, if the relevant water supply authority, here the Gosford City Council, had charged the owner under the quantity cost scheme the owner would have been entitled to pass the charge on to the residents. In this case, however, the Council is one of the few left in New South Wales which continues the old excess water system. The fixed charge levied on the owner of the property depends, as it happens, on the size of the pipe connecting the water supply to the Council’s main. In this case, that charge includes the first two hundred kilolitres of water a year supplied to the property. The owner did not seek to pass this charge on to the tenants, at least specifically (presumably, it was part of the costs taken into account when calculating rent). As mentioned above, it charged all residential tenants for all their water use at the same rate at which it paid for excess water. The defendants submitted that the legislation prohibits this charge.
7 The issue in the case depends upon the proper interpretation of ss 34, 36, 38 and 39 of the Act. Section 38 applies in respect of the period 1 March 1999 to 31 December 1999 and s39 in respect of the period since 1 January 2000. For convenience, I set out the relevant parts of these provisions below -
- “34. Definitions
- excess water charge means those charges payable by a direct customer of a water supply authority for that part of water used in excess of that amount for which an annual rate or fixed charge is payable
- water consumption charge means a charge for water that is calculated only on the basis of how much water is used.
- 36 Park owner to pay council rates, land tax and other charges
- (1) It is a term of every residential tenancy agreement that the resident will pay:
- (b) all excess water charges payable in connection with the residential premises, but only if the residential site is individually metered by the relevant water supply authority in accordance with the regulations,…
- …
- (2) It is a term of every residential tenancy agreement that the park owner will pay all other rates, taxes or charges payable in connection with the residential premises.
- 38 Resident may agree to pay certain water consumption charges other than for excess water (until 31 December 1999)
- (1) The park owner and resident under a residential tenancy agreement may agree that it is a term of the agreement that the resident will pay all water consumption charges (other than excess water charges) in connection with the residential premises, if the residential premises are individually metered in a manner that complies with the regulations and:
(a) the resident is billed either:
(ii) by the park owner in accordance with this section, and(i) directly by the water supply authority, or
- (b) the resident is not liable to pay a minimum charge.
(2) If the resident is billed by the park owner, the amount that the resident is required to pay under such a term is the lower of the following amounts:
- (a) the amount that the resident would have been required to pay for water consumed if the resident were a direct domestic customer of the relevant water supply authority,
(3) If a resident is billed by the park owner:
(b) the amount prescribed by the regulations.
- (a) the resident must be billed at the same frequency as the park owner is billed by the relevant water supply authority, but may be billed more frequently if the parties so agree, and
- (b) the bill provided by the park owner must include:
(ii) the last meter reading before that (if any), and
(i) the last meter reading taken before the bill was issued, and
(iii) the amount of water supplied during the billing period, and
(iv) the charge per unit of water.
(4) It is a term of every residential tenancy agreement that the park owner will pay all water charges in connection with the residential premises other than those that the resident agrees to pay, and is required to pay, under this section.
39 Resident to pay certain water consumption charges other than for excess water (from 1 January 2000)(8) This section does not apply to any water consumption charge incurred after 31 December 1999.
(1) It is a term of every residential tenancy agreement that the resident must pay all water consumption charges in connection with the residential premises, if the residential premises are individually metered in a manner that complies with the regulations and:
(i) directly by the water supply authority, or(a) the resident is billed either:
- (ii) by the park owner in accordance with this section, and
(b) the resident is not liable to pay a minimum charge.
(2) If the resident is billed by the park owner, the amount that the resident is required to pay is the lower of the following amounts:
(a) the amount that the resident would have been required to pay for water consumed if the resident were a direct domestic customer of the relevant water supply authority,
(b) the amount prescribed by the regulations.
(3) If a resident is billed by the park owner:
(a) the resident must be billed at the same frequency as the park owner is billed by the relevant water supply authority, but may be billed more frequently if the parties so agree, and
(b) the bill provided by the park owner must include:
(i) the last meter reading taken before the bill was issued, and
(ii) the last meter reading before that (if any), and
(iii) the amount of water supplied during the billing period, and
(4) The park owner must provide a resident who has paid any water consumption charges to the park owner with a receipt that is separate from any rent receipt provided to the resident or is identified separately on the rent receipt.”(iv) the charge per unit of water.
8 It appears to follow from s 36 that, where a residential site is not individually metered by the relevant water supply authority, it is an implied term in the residential tenancy agreement that the owner is liable to pay all charges for water levied on the owner, since the resident is liable to pay the excess water charge only where the residential site is “individually metered by…the water supply authority” (not the case here) and the owner is to “pay all other rates…or charges payable in connection with the residential premises”. (I interpolate that the drafting of the section seems to be unnecessarily complicated by the reference to individual metering of residential sites, since, by the statutory definition, an “excess water charge”, applies only to “a direct customer of a water supply authority” which, presumably, could only happen where the customer’s water usage is separately metered.) It is clear that the obligation of the owner to pay the water supply authority for water supplied to the park is a rate or charge “payable in connection with the property”. It is argued, however, that s 38 (in respect of the relevant period) permits a resident to agree to pay the charges for water as specified in clause 5.4 of the agreement set out above. The definition of “excess water charge” contained in s 34 covers only amounts payable, in effect, by the customer to a “water supply authority”, here the Council, and assumes or (more precisely) describes a system in which an annual rate or fixed charge is payable for, amongst other things, a quantity of water and an additional charge is made for the consumption of any greater quantity, that is to say, an excess water scheme. The definition of “water consumption charge” describes a charge for water, not only that is calculated by reference exclusively to the amount actually used but, as it seems to me, in the context of a structure of charging in which no fixed charge is made, that is to say, a quantity cost scheme. The definitions of “excess water charge” and “water consumption charge” thus either assume or describe mutually exclusive systems of charging for water supply. It was submitted by Mr Wales SC for the plaintiff that the this was not necessarily so on the ground that, where more than the initial quantity of water is consumed, the effect of the excess water scheme is simply that the cost of water actually used was calculated according to different rates: so much for the first 200 kilolitres and so much for the additional water. However, the fixed charge cannot be regarded as the cost of 200 kilolitres of water simply because, when it is paid, an excess water charge is imposed for additional consumption. It should be noted that it is part of the definition of the “excess water charge” that it is imposed by the water supply authority. On the other hand, a “water consumption charge” is not so limited. It is defined exclusively by reference to the method of calculation and makes no mention of the supplying or charging body.
9 So far as s 38(1) is concerned, Mr Wales SC submitted that, although the owner here had paid for excess water and, indeed, was passing on that cost to the residents, the resident was not paying excess water, as such, but simply a water consumption charge which was referable only to the actual metered water usage by the tenant and, as it happened, was calculated at the same excess water rate as that paid by the owner. It therefore complied exactly with the definition of “water consumption charge” in s 34, although it was charged by the owner and not by the water supply authority. Because of the definition of “excess water charge” in s 34, the parenthetical reference to excess water charges, he submitted, could only apply where the water supply authority billed excess water to the resident, which had not occurred; it was therefore irrelevant. (Section 36(1)(b) required the resident to pay excess water charges directly imposed by the water supply authority and thus envisages circumstances in which individual sites are subject to the excess water scheme.) Moreover, the parenthetical exclusion of excess water charges implied that, absent such exclusion, a water consumption charge within the meaning of the sub-section might include an excess water charge. This result would be consistent with the “global” interpretation of the definition of “water consumption charge” in s 34 for which the plaintiff contended.
10 I do not consider that the words in parenthesis carry the suggested implication. So far as the owner is concerned, it can bill the resident for “all water consumption charges…in connection with the residential premises”. In the context, the “charges” in question are those imposed on the owner by the water supply authority. The sub-section would make no sense if it were read as meaning “…the resident will pay all water consumption charges imposed by the owner”. The parenthetical exclusion of “excess water” makes it clear that agreement for payment of excess water charges levied on the owner is prohibited. Otherwise, the statutory permission as to water consumption charges might not have been interpreted as also amounting to a statutory prohibition as to excess water charges. Thus the parenthetical phrase does not imply that water consumption charges, as defined, might include excess water charges, an implication at all events completely at odds with the definitions of these terms in s 34. This interpretation also explains why the phrase is omitted from sub-s 39(1), discussed below. As I have said, the definition of “water consumption charge” makes it clear, and the point is emphasised by the definition of “excess water charge”, that the two categories are independent. So interpreted, s 38 provides, in effect, that the owner may agree with the tenant to pass on the water usage charges it is required to pay to the water supply authority but only where those charges fall within the definition of “water consumption charge” in s 34 and that they cannot agree that the owner may pass on excess water charges. Nor, because the resident is not liable to pay any minimum charge, can any fixed charge be passed on. Thus, although the owner and resident could agree that the latter will pay an amount calculated by reference to the amount of water used by the resident and arguably this would bring the payment the charge within the definition of a water consumption charge in s 36, as Mr Wales contends, the argument does not go far enough for his purposes: firstly because sub-s 38(1) only authorises agreement in respect of charges imposed on the owner; and, second, it prohibits agreement where those charges are for excess water. Sub-section 38(1) is not limited to the payment of charges for water to the park owner. The parties may agree that the resident is to pay charges that have been directly billed by the water supply authority. But the only charges billed directly by the water supply authority to the resident that can fall within sub-s 38(1) are those imposed where a quantity cost scheme is in operation, a result that, as I have said, follows from the definitions of “water consumption charge” and “excess water charge” in s 36. This interpretation thus brings about a consistent result where the owner is billed by the water supply authority and where the resident is so billed: agreement as to payment by the resident of these charges is limited to water consumption charges imposed either directly or indirectly by the water supply authority.
11 Accordingly, I am of the view that s 38(1) permits the described agreement only where a quantity cost scheme is in operation.
12 This interpretation is confirmed, as it seems to me, by the provisions of sub-ss 38(2) and (3). The amount permitted to be charged by the owner is governed by sub-s 38(2). If an excess water scheme were in operation, then (subject to the specification of a lower amount by regulation) an owner could charge both the fixed fee that the resident would be required to pay in the hypothetical circumstance envisaged by the sub-section together with the excess water charge: para 38(2)(a). However, para 38(1)(b) expressly excludes liability to pay a minimum charge. It is not possible to read down para 38(2)(a) to refer only to excess water charges, since it expressly refers to payment for “water consumed”. Furthermore, sub-s 38(3) provides that the bill is to include “the charge per unit of water”, and makes no reference either to the fixed charge or the “free” allowance of water permitted to be used before the excess charge becomes payable. These omissions would be inexplicable if the resident could be charged at a notional excess water rate. Mr Wales SC sought to avoid this problem by submitting that sub-s 38(2) cannot be applied, as it requires a comparison between two amounts, one of which does not exist, and was therefore irrelevant. Accordingly, there was no need to attempt to calculate a charge based upon the assumption that the resident was a direct customer of a water supply authority and thus to take into account or otherwise deal with the fixed charge that the resident would have been charged under an excess water scheme. It seems to me, however, that the only sensible interpretation of this sub-section is that, there being no amount prescribed, the park owner can only charge the amount calculated in accordance with para 38(2)(a), which must assume, as I think, that the resident would have been charged as a direct domestic customer under a quantity cost scheme; para 38(2)(b) should be read as if the words “if any” were inserted after the word “amount”.
13 Thus, the effect of s 38 is that the park owner who pays a water consumption charge (and, hence, does not pay any excess water charge) may pass on that charge to the resident of a site which is individually metered in compliance with the regulation at the lower of the rate which the resident would have paid if charged directly by the water supply authority or the amount, if any, prescribed by regulation.
14 Section 39 governs the position from 1 January 2000. Sub-section 39(1) inserts a term into every residential tenancy agreement requiring the resident, in certain circumstances, to pay “all water consumption charges in connection with the residential premises. Section 39 mirrors s 38, except that it prescribes the payment of water consumption charges as a condition of all residential tenancy agreements as distinct from permitted the owner and the resident to agree on the matter. The parenthetical exclusion of excess water charges has been omitted, as I think, because it is unnecessary, the term being prescribed rather than permitted to be the subject of agreement. Thus s 39 should be understood in the same sense as s 38, so that it applies only where the system of water charges in operation is the quantity cost system and not the excess water system, in which event the applicable provision is s 36.
15 Where the excess water system operates, the only mode by which the owner can recover the cost of water supplied to the park which is, of course, charged to it by the water supply authority, is by including in the rent an element sufficient to cover the cost. So considered, the supply of water is the supply of a service by the park owner and it is reasonable that the rent payable by the tenant should reflect this provision. Of course, rent necessarily includes various kinds of fixed and recurrent costs as well as a profit margin. In considering the exercise of its powers under Part 5 Division 1 of the Act in connection with the setting of rents, the Tribunal would need to take into account the cost to the landlord of the provision of water.
16 It is conceded by the plaintiff that the amounts charged to the defendants were payable only if s 38 or s 39 applied to them. For the reasons I have given, I consider that neither section applies to permit or require the payment of these charges.
17 Accordingly, the appeal is dismissed with costs.
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