Reckless v Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park (No. 2)

[2018] NSWCATCD 59

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:	Reckless v Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park (No. 2) [2018] NSWCATCD 59
Hearing dates:	6 December 2018
Date of orders:	09 January 2019
Decision date:	09 January 2019
Jurisdiction:	Consumer and Commercial Division
Before:	W Priestley, General Member
Decision:	1. The time within which the applicant may lodge the within application is extended to 24 February 2016. 2. The respondent, Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park, is to pay the applicant, Margaret Reckless, $766.15 immediately.
Catchwords:	Electricity charges
Legislation Cited:	Residential (Land Lease) Communities Act 2013, sections 76, 77, 156, and 157. Residential (Land Lease) Communities Regulations 2015, clause 13.
Cases Cited:	JLW (Vic) Pty Ltd v Tsilogou [1994] 1 VR 237 Marsh v Pines Resort Management Pty Ltd.[2018] NSWCAT Myles v Holiday Retreats Australia Pty Ltd t/as Rivergum Holiday Park (No.2) [2018] NSWCAT
Texts Cited:	Principles of Australian Contract Law Gooley, Radan and Vickovich, LexisNexis Butterworths 3rd edition 2014, at page 580
Category:	Principal judgment
Parties:	Margaret Reckless (Applicant) Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park (Respondent)
Representation:	Solicitors: Ken Beilby (Northern Rivers Community Legal Centre) (Applicant) Derek Fernandez (Land Lease Living Industry Association of NSW) (Respondent)
File Number(s):	RC 18/16217
Publication restriction:	Nil

reasons for decision

The application

1. In her application lodged on 24 February 2017, the applicant sought the following;

1. An order declaring that an additional term of the agreement is void;

2. Access to bills or other documents to be provided in relation to utility charges payable by homeowners to the operator; and

3. An order resolving a dispute concerning an operator’s compliance with ensuring unimpeded vehicular access to homes in the community at all times.

2. At the hearing on 29 June 2017 (the first hearing), the application was amended so as to seek compensation for amounts overcharged by the respondent for the applicants use of electricity. The Tribunal reserved its decision.

3. On 3 August 2017, the Tribunal delivered its decision and dismissed the application.

4. That decision was successfully appealed to the Tribunal’s Appeal Panel, and the matter was remitted to the Tribunal at first instance to determine the amount of electricity charges, if any, to be refunded to Mrs Reckless.

5. The Appeal Panel’s decision was then appealed to the Supreme Court, and a stay granted in relation to the orders of the Appeal Panel. On 17 August the Supreme Court dismissed that appeal.

6. On 6 December 2018 the application, now limited to the issue of the amount of electricity charges to be refunded to Mrs Reckless, was heard by the Tribunal, as originally constituted, and the decision was reserved. The amount to be refunded to Mrs Reckless, is the amount the respondent has charged in excess of the restriction in section 77 of the Act, not to charge more than what the respondent has been charged by its electricity provider. That section says;

77 Utility charges payable to operator by home owner

(1)    This section applies if, under a site agreement, the home owner is required to pay utility charges to the operator for the use by the home owner of a utility at the residential site.

(2)   The home owner cannot be required to pay for the use unless:

(a)   the use is separately measured or metered, and

(b)   (b) the operator gives the home owner an itemised account and allows at least 21 days for the payment to be made.

(3)   The operator must not charge the home owner an amount for the use of a utility that is more than the amount charged by the utility service provider or regulated offer retailer who is providing the service for the quantity of the service supplied to, or used at, the residential site.

Maximum penalty: 20 penalty units.

(4)   The regulations may:

(a)   provide for a maximum utility charge payable by home owners to the operator, and

(b)   create an offence for an operator to request or receive more than that maximum charge (if any).

(5)   The regulations may provide that a service availability charge for electricity payable by home owners to the operator of a community is to be discounted in accordance with the regulations where less than 60 amps are being supplied.

The Hearing of the Remitted Application

7. At the hearing, the parties relied on documents and written submissions they had lodged with the Tribunal and given to each other. Due to the large number of documents, it is not practicable to list all of them, and only documents of significant importance are specified. The respondent’s expert Ms Marija Petkovic was called and a report she authored dated 16 November was tendered. Ms Petkovic was cross-examined and asked questions by the Tribunal.

8. All of the evidence and the written submissions have been taken into account by the Tribunal in reaching its findings and decision.

9. Ms Petkovic’s qualifications to give the opinions set out in her report, were not challenged. As stated in her report, she is a leading energy expert and has “extensive experience in energy management and electricity billing for commercial and industrial businesses.”

Extension of Time

10. The respondent consented to the time within which Mrs Reckless can make her application being extended to 24 February 2016, thus enabling the applicant to seek to recover any overcharging since the Residential (Land Lease) Communities Act (“the Act”) commenced on 1 November 2015.

Jurisdiction

11. The Tribunal has jurisdiction to hear and determine the application under sections 156 and 157 of the Act, and sections 28 and 29 of the Civil and Administrative Tribunal Act 2013.

Findings

12. The essential facts are not in dispute. Mrs Reckless is required to pay electricity charges under the site agreement she has with the respondent. The use of Mrs Reckless’ electricity is separately metered. However, unlike the respondent’s parent meter, the meter at Mrs Reckless’ home is not a smart meter, and cannot separate her usage into “Off Peak, “Shoulder” and “Peak”.

13. As well as supplying electricity to Mrs Reckless’ home and the other 69 residential sites in the community, the respondent also supplies electricity to non-residential sites, and common facilities.

14. The respondent concedes Mrs Reckless has been overcharged for the electricity she has consumed at her home in the community. The parties agree Mrs Reckless should be refunded the difference between what she has paid, and what she should have paid. The issue to be determined is how Mrs Reckless should have been charged. That requires the Tribunal to consider various methods, or formulae, the parties have proposed to ensure the respondent complies with its obligation in section 77 (3) of the Act, not to charge the applicant more than it has been charged by its electricity supplier. The first step in that exercise requires a determination about which of the multiple charges the respondent is charged by its electricity supplier, can be passed on to the applicant.

15. The respondent’s electricity supplier is Origin Energy. The total of the amount charged by Origin for electricity supplied to the respondent, is made up of several categories. On accounts issued before 1 April 2017, there are three categories – “Energy Charges”, “Network Charges”, and “Other Charges”. Each of these categories of charges is then broken down into separate components. The total number of components is 19.

16. On accounts issued after 1 April 2017, there are 6 categories of charges, namely “Energy Charges”, “Network Charges”, “Regulated Charges”, “Environmental Charges”, “Metering Charges” and “Retail Charges”. The type of components is the same, and again there are 19 of them.

17. In both types of accounts, GST is also charged.

18. The Tribunal accepts the evidence of Ms Petkovic, that all of these components are charged to residential customers, but, unlike commercial customers such as the respondent, residential customers are not given an account itemising each component. Importantly, in her oral evidence Ms Petkovic said that every component (other than late fees and credit card fees) of the accounts rendered on the respondent by Origin, is a part of the amount charged by Origin for the quantity of electricity supplied to the respondent.

19. The amount charged by Origin to the respondent for the quantity of electricity supplied to it, is therefore not limited to the kilowatt hour rates under the category “Energy Charges” in the accounts. To take the account issued on 2/12/2015 (page 57 of the respondent’s bundle of documents) as an example, the amount charged is not limited to 6.2498 cents (peak), 4.3637 cents (off peak) and 6.2498 cents (shoulder). The amount charged also includes the various rates per kilowatt hour for “Off Peak”, “Off Peak Demand”, Peak” and so on, as well as the “Access Charge” of $13.90 per day, itemised under the category of “Network Charges”. The amount charged also includes all those components itemised under the category “Other” such as “ESC Charge”, which is the cost of the NSW scheme known as the “Energy Savings Scheme”. This scheme requires energy retailers to purchase certificates called ESCs (page 5 of Ms Petkovic’s report refers). A further charge under this category is an “AEMO Charge”, which is a fee the Australian Energy Market Operator charges Origin for “operating and administering the National Energy Market” (page 4 of the report).

The applicant’s position

20. The applicant proposes three methods to calculate what amount Mrs Reckless should have been charged.

21. The first is to average the “Peak”, “Off Peak” and “Shoulder” rates, which appear in the respondent’s account under the category “Energy Charges”, and apply that average rate to the number of kilowatt hours Mrs Reckless has consumed for that period.

22. The second method is to average the peak and shoulder rates that appear in the relevant Origin account under the heading “Energy Charges”, and apply that to Mrs Reckless’ usage.

23. The third method is to divide the total cost charged to the respondent under the heading “Energy Charges” by the number of kilowatt hours consumed by it, then apply that rate to the number of kilowatt hours consumed by Mrs Reckless’.

24. None of the three methods includes any of the components the respondent has been charged under the headings “Network Charges” and “Other Charges” in the Origin accounts issued before 1 April 2017. Nor do they take into account any of the five categories of charges other than “Energy Charges” on accounts issued after that date.

25. All three methods produce an amount significantly less than what the respondent has actually paid for the same electricity it has on-supplied to the applicant. The applicant says “Network” charges cannot be passed on to her because they are not related to the cost of the electricity consumed by the applicant, but are the cost of supplying electricity to the respondent, and having electricity available for consumption. That submission is rejected, as the Tribunal accepts the oral evidence of Ms Petkovic that all the various charges, or components, are “the cost of electricity.” In terms of section 77 (3) they are included in “the amount charged by the utility service provider…..for the quantity of the service supplied to, or used at, the residential site”.

26. In support of the above submission, the applicant relied on cases such as Myles v Holiday Retreats Australia Pty Ltd t/as Rivergum Holiday Park (No.2) and Marsh v Pines Resort Management Pty Ltd. However those cases can be distinguished, as in neither of them was any expert evidence about what the industry regards as “the cost of electricity”, or charges for the “quantity of the service supplied to, or used at, the residential site”. Nor did the respondents in those cases propose an alternative method for calculating what the applicants should have been charged.

27. Next, the applicant contended the “Network” charges, are a service availability charge, which the applicant is required to pay by virtue of cls 13 of the Residential (Land Lease) Communities Regulations, and that by being included in the cost for the applicant’s supply and use of electricity, the applicant is, or might be, charged twice for the same thing.

28. Clause 13 of the Regulations says;

13 Maximum service availability charge—electricity

(1) The maximum service availability charge payable, in respect of any period, by a home owner to the operator for the supply of electricity at a residential site is the amount that would have been payable for the period if the electricity had been supplied to a small customer under a standard retail contract of the applicable local area retailer at standing offer prices.

(2) Despite subclause (1), the service availability charge payable by a home owner to an operator of a community for supply at a residential site of less than 60 amps of electricity is to be discounted in accordance with subclause (3).

(3) The maximum service availability charge payable by a home owner to an operator for supply at a residential site of less than 60 amps of electricity is:

(a) if less than 20 amps of electricity is supplied to the residential site—20 per cent of the service availability charge that would apply if the home owner were a small customer under a standard retail contract of the applicable local area retailer, or

(b) if 20 amps or more but less than 30 amps of electricity is supplied to the residential site—50 per cent of that service availability charge, or

(c) if 30 amps or more but less than 60 amps of electricity is supplied to the residential site—70 per cent of that service availability charge.

(4) In this clause, local area retailer, small customer, standard retail contract and standing offer prices have the same meanings as in the National Energy Retail Law (NSW).

29. Section 3 of the Act defines “utility” and “utility charge“ as follows:

utility means any of the following services:

(a) electricity,

(b) gas,

(c) sewerage,

(d) water,

(e) another service prescribed by the regulations.

utility charge means a usage charge or service availability charge for the provision of a utility.

Note. The Interpretation Act 1987 contains definitions and other provisions that affect the interpretation and application of this Act.

30. That contention is also rejected. In neither method proposed by the respondent, is there included a service availability charge. While in the first method proposed the “Network” charges are displayed separately, there is no service availability charge included. As mentioned above, in that method, the total of the “Network” charges have been divided by the total kilowatt hours used, to produce a figure that can be applied to the applicant’s usage. In the second simpler method, which produces the same result, the “Network” charge is not shown separately.

31. Furthermore, as was submitted by the respondent, on ordinary principles of statutory construction, subordinate legislation such as clause 13 of the Regulations, cannot impose a charge which is prohibited by the enabling legislation. In other words, the total of electricity charges imposed on the applicant, whether they be a combination of supply and usage charges and a service availability charge, or just supply and usage charges, cannot exceed what the respondent has been charged by Origin. As Davies J said in Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park [2018] NSWSC 1343 at para 53 “On the proper construction of section 77 (3) of the RLLC Act, the plaintiff is not entitled to charge the defendant any more than the plaintiff has been charged for the supply or use of the electricity consumed by the defendant.”

32. The applicant also contends that the charges under the heading “Other” are mostly taxes imposed by the NSW government on the respondent, and cannot be passed on to her because of section 37 (1) () of the Act which relevantly says;

37 Operator’s responsibilities

(1) The operator of a community has the following responsibilities:

(i) to pay all rates, taxes and other charges payable by the owner or operator of the community,

33. That argument is rejected. There is nothing in the Act which, subject to any statutory constraint such as that contained in section 77 (3), and the terms of the site agreement, prevents the respondent passing on such costs to residents. Further, section 77 is specific to the subject of electricity, while section 37 is not. As such, the rule that specific provisions take precedence over general provisions applies.

34. Finally the applicant argued that because the respondent is not charging a service availability charge, separately to what it is charging under section 77, the applicant will be paying more than what she should. This is said to come about because there is at least one vacant site at the community, and other residents sometimes leave their sites vacant. If the residents with site agreements over these sites contribute nothing towards the costs imposed by Origin (because they use no electricity), the amount Mrs Reckless has to pay will increase. That may be so, but Mrs Reckless will still only be paying for the electricity she uses. Also, section 77 (3) prevents the operator charging a resident anything, if they have not used electricity.

The respondent’s position

35. The respondent’s position is that all the charges on the accounts it has received from Origin are amounts charged for the quantity of electricity supplied to it. The respondent proposes two possible methods of charging the applicant for the electricity it supplies to her. The first is to group all the components of Origin’s charges into 3 categories – “Energy charges that vary with energy usage”, “Supply charges that vary with demand” and “Fixed supply charges”; then divide each of the three amounts by the total amount of kilowatt hours the respondent has consumed. This exercise results in a separate cents per kilowatt hour rate for each of the three categories. Each rate can then be applied to the total kilowatt hours Mrs Reckless’ has used, as recorded on the meter at her home for the same period.

36. The second method simply divides the respondent’s total kilowatt hour usage, into the total Origin has charged the respondent, to produce an overall cents per kilowatt hour rate. This rate can be then be applied to Mrs Reckless’ recorded usage. In both cases, the result is the same. The only difference in the two methods is that the first one would reveal more detail, or itemisation, to the respondent. However, the lack of detail can be overcome, if the respondent provided the applicant with a copy of the account it received from Origin.

37. Ms Petkovic acknowledges that this method is not perfect, as is outlined in the assumptions she has made in her report. The difficulties arise because the meter at Mrs Reckless’ home is not a “smart meter”, and cannot precisely identify when Mrs Reckless consumed electricity. Consequently it is not possible to say how much electricity Mrs Reckless used for which the respondent was charged at the off peak rate, rather than the peak rate or shoulder rate. Therefore, if Mrs Reckless has consumed more electricity at the off peak rates than the respondent has, she will be charged a greater amount for the use of electricity than the respondent has been charged by Origin. However in this case, there is no evidence that has occurred, and it seems the only way such evidence could be obtained in future, would be by the installation of a smart meter at Mrs Reckless’ home. It appears on the evidence just as likely Mrs Reckless might on occasions, be charged less than the respondent was, because her usage of electricity at “peak” rates, was greater than the respondent’s. As Ms Petkovic says in her report, such discrepancies, if they occurred are likely to be minor, and to even out over time.

35. The fact the methods proposed by the respondent may not be 100% accurate, does not mean they cannot be used to determine the amount of compensation that is to be paid to the applicant. As Brooking J said in JLW (Vic) Pty Ltd v Tsilogou [1994] 1 VR 237 at 241 “[T]he plaintiff must prove what he has suffered and will suffer and what is fair and reasonable compensation in respect of that. It is often said the amount of the damage must be proved with certainty, but this only means as much “certainty” as is reasonable in the circumstances. Where precise evidence is obtainable, the court naturally expects to have it; where it is not, the court must do the best it can”.

Conclusion

39. In my view, the most accurate method to use to compensate Mrs Reckless, is the second method proposed by the respondent. That is, to determine the overall cost of the electricity to the respondent, divide that amount by the total kilowatts used, and apply that figure to the total kilowatts used by the applicant. Based on the analysis of Ms Petkovic, that is an amount of $766.15 for the period 1 November 2015 to 29 June 2018. The respondent should refund that amount to Mrs Reckless.

**********

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

Registrar

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Amendments

24 January 2019 - Date of orders amended to 9 January 2019

Decision date amended to 9 January 2019

Text cited removed

Respondent's solicitor's name amended to Derek Fernandez

References to "Ms Pektovic" amended to "Ms Petkovic"

Decision last updated: 24 January 2019