Tamberra Pty Ltd as trustee for the Max Ahlfeld Family Trust Sugar Coast Relocatable Homes v Murray
[2012] QCAT 553
•5 November 2012
| CITATION: | Tamberra Pty Ltd as trustee for the Max Ahlfeld Family Trust Sugar Coast Relocatable Homes v Murray and Ors [2012] QCAT 553 |
| PARTIES: | Tamberra Pty Ltd as trustee for the Max Ahlfeld Family Trust Sugar Coast Relocatable Homes |
| v | |
| Sue Murray Kath Hawtin Stella Anderson Carmel Keene Grace Mellers Frank Dunn Phyllis Wagner Frances Robinson Ian and Jan Bails Gwen Harris Leonora Evans Robert and Elizabeth Reid Ann and Jim Matthews Elliott Estate Arthur and Barbara Wragg Wilma McFadden Bruce and Marjorie Hindmarsh Rex and Beth Collins John and Betty Higson Nick and Beverly Henningsen Leslie Bowie Fay Dermody Len and Sylvia Morley Simon Morley Jane Jones Roger Nielsen Lois Fitzgerald |
| APPLICATION NUMBER: | OCL142-11 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | On the papers |
| DECISION OF: | Fiona FitzPatrick, Member |
| DELIVERED ON: | 5 November 2012 |
| DELIVERED AT: | Brisbane |
| 1. ORDERS MADE: | 1. The park owner’s application for an increase in site rent is dismissed. 2. At the same time as the park owner gives home owners their utility bills, it must make copies of its supplier’s utility invoices available for inspection at the park office, provide a copy to the home owner’s association, and post a copy on the park notice board free of charge. Individual owners are entitled to obtain their own copy either from the home owners’ association or from the park owner, without a fee, but on payment of a photocopying charge calculated at commercial rates. |
| CATCHWORDS: | Validity of electricity service fee charges by park owner following the introduction of s 99A into the Manufactured Homes (Residential Parks) Act 2003 on 1 March 2011 – “utility” Manufactured Homes (Residential Parks) Act 2003, ss 4, 73, 92, 99A Bates v Seachange (Land) Pty Ltd as trustee [2012] QCAT 289 |
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 (QCAT Act).
REASONS FOR DECISION
The Manufactured Homes (Residential Parks) Act 2003 (“the Act”) regulates how park owners can charge home owners for utilities under an “on supply” arrangement.
The utility charging rules in the Act do not apply to all manufactured home park residents. They apply to manufactured home owners who:
a) are parties to site agreements in a manufactured home park or mixed use park; and
b) purchase utilities from the park owner.
They do not apply to:
a) caravan residents in a mixed use park; or
b) tenants in a manufactured home in a manufactured homes park or mixed use park.
Park owners do not have a legislative obligation to follow the charging rules for all residents. However they may choose to adopt them as fair trading guidelines and standardise utility charging across their park.
Jurisdiction
The Act gives the Tribunal jurisdiction over “site agreement disputes”, including disputes between the parties to a site agreement about the parties’ rights and obligations under the agreement or the Act. The tribunal may make any order it considers appropriate to resolve these disputes.[1]
[1] Manufactured Homes (Residential Parks) Act 2003, s 140.
The home owners and the park owner disagree about how the utility charging provisions of the Act should be interpreted and about how they operate in practice in manufactured home parks. There is a dispute between the parties about their rights and obligations under the Act.
Is this dispute between “parties to a site agreement”?
The park owner says that there are several versions of site agreements in operation at the park.[2] Agreement between a park owner and a home owner on site rent, the positioning of a manufactured home; and the home owner’s use of the park’s common areas and communal facilities is sufficient to establish a “site agreement.”[3]I am satisfied that the applicants are parties to a site agreement.
[2] Page 28 park owner’s submissions.
[3] Manufactured Homes (Residential Parks) Act 2003, s 14.
Definition of “utility”
The utility charging regime only applies to utilities which fall within the definition of a “utility” in the Act. The schedule to the Act defines a “utility” as any of the following services—
i)electricity;
ii)gas;
iii)sewerage;
iv)water;[4]
[4] Includes waste water: Bates v Seachange (Land) Pty Ltd as trustee [2012] QCAT 289.
v)another service prescribed under a regulation.
The utility charging provisions do not apply to telephone services, as they do not qualify as a “utility” for the purposes of the Act.
Background to dispute
The Electricity Act 1994 regulates the on-supply of electricity in Queensland, including in manufactured homes parks, to the extent that it is not displaced by more specific and recent provisions in the Act. Notified prices for electricity are determined by the Queensland Competition Authority and published in schedules of tariffs/ready reckoners.
Prior to the introduction of s 99A into the Act on 1 March 2011, park owners had to comply with Tariff 11 when calculating utility charges for either metered or unmetered sites. The reckoner is headed “…MAXIMUM CHARGES to be applied in the ON-SUPPLY OF ELECTRICITY to DOMESTIC CUSTOMERS (sic)”. It limits three types of electricity charges:
i)-maximum charge rates for electricity consumption expressed in cents per kilowatt hour; and
ii)-maximum service fees which can be charged per metering point.[5]
[5]It also lists “Qld Government Electricity Rebates” which on-supply customers can claim “at the discretion of the On-supplier”.
Section 99A substituted new utility charging rules for the on-supply of utilities in manufactured home parks, but only where utility consumption at a site is separately measured or metered. The recent decision of the Tribunal in Pomroy v Emmeltow[6] considers the role and function of s 99A. It also considers the relationship between s 99A and its “partner section”, s 73. In summary, from 1 March 2011 the park owner’s obligations when charging for utilities are as follows.
[6] Pomroy and Ors v Emmeltow Pty Ltd [2012] QCAT 492.
Utility charging rules where consumption of a utility becomes separately measured or metered
Section 73 requires the park owner to levy utility charges separately rather than as part of the site rent.
Section 99A limits these separate utility charges to charges for the amount of the utility consumed by the home owner, multiplied by the rate at which the park owner purchased the utility from the supplier. Ancillary utility charges can be incorporated into the site rent, but only by agreement or pursuant to an order of the Tribunal.
Utility charging rules where consumption of a utility is not separately measured or metered
The park owner cannot charge home owners separately for utilities following the introduction of s 99A. However s 99A does not prevent the park owner from charging for utility consumption and ancillary utility charges as part of the site rent, (by agreement or pursuant to the order of the Tribunal) so the charging rules in s 99A do not apply. However, in the case of electricity, any service fee incorporated into the site rent must not exceed the maximum service fee per metering point set by the Competition Authority in Tariff 11.
Tamberra Pty Ltd, (the park owner) is the owner of Sugar Coast relocatable home estate at Urangan, Hervey Bay. It on-supplies electricity to sites in the park. The sites are metered, so the park owner was required to comply with the new utility charging rules in s 99A from March 2011. However the park owner continued to use Tariff 11 to calculate separate utility charges, until December 2011.
The park owner says that it only moved to change the way it charged the electricity service fee after it received a letter from the Department of Communities on 3 November 2011.[7] That letter outlines the Department’s views on how s 99A should be applied by park owners. After pointing out the changed rules for separate utility charges in manufactured home parks, the Department expressed the view that as “the legitimate costs of providing utility infrastructure within the park” could no longer be charged separately, the park owner should consider varying the site rent to cover those costs “by following the procedures outlined in the Act”.[8]
[7] Annexure 6 to park owner’s application.
[8] Emphasis added.
On 21 November 2011 the park owner wrote to home owners notifying them that due to the legislative changes it would no longer charge the service fee separately. Instead it proposed transferring the fee to the site rent. It pointed out that home owners would not be paying more over all for utilities, they would just be paying it in a different way.
The letter advised home owners that the site rent had been "increased to $616.46 from 1 December 2011.[9] This will enable you to claim rent assistance on the increased amount..." It refers to legal advice that residents who are party to a form 2 site agreement are obliged to pay the increase because a clause in the agreement “covers the change”. The letter continues “in the unlikely event of the Tribunal not approving the change, the company will issue a full refund on the change.” It advises residents if they do not agree to pay they are “technically in breach of (their) site agreement.”
[9] Annexure 8 to park owner’s application.
The letter advises owners who “have the earlier form 2 agreement or the original old agreement (or) do not agree or have not replied, the company will continue to charge the old rent of $608.06 inclusive”, but it points out that “Centrelink will not pay rent assistance on backdated rent payments, so you will not be eligible for rent assistance on the increased difference at a later date.”
The letter requests home owners to consent to the site rent increase. Some owners did consent, however it seems that 27 out of 80 home owners have objected to the increase.
The park owner continued to include the service fee in the monthly electricity invoice until 1 December 2011.[10]
[10] Annexure 5 of park owner’s application.
Orders sought
The park owner has sought the following orders in its application:
a) To add the electricity service fee; currently ...$7.97 plus GST @ 5.5% to the monthly site rental, pursuant to section 73 of the Act; and
b) That the increase be backdated to 1 December 2011 being the first month that the service fee was deleted from the invoice. This was later amended to a request to backdate the increase to 1 March 2011. “As the amounts are the same (only the method of payment would differ) no adjustment will be necessary.”[11]
It subsequently sought additional orders in its statement of evidence:
c) Those residents who objected or abstained from paying the altered rental from December 1 2011 be ordered to pay:
[11] Applicant's statement of evidence, page 8.
i.the $7.97+GST @ 5.5%( long term rental GST); and
ii.the percentage difference caused by the 5% rental increase that came into effect on February 1 2012, so all residents are paying the same monthly rent.
The respondent home owners have asked the Tribunal to:
a) Reject the application to add the electricity service fee to the monthly site rental;
b) Direct the Applicant to refund all electricity service fees plus GST charged at 10% to home owners with effect from 1 March 2011, (the date on which section 99A of the Act commenced); and
c) To direct the applicant to disclose how the rate per kwh charged to home owners is calculated and why it varies from month to month.
The legislation
The “main object” of the Act is to “regulate, and promote fair trading practices in residential parks—
a) to protect home owners from unfair business practices; and
b) to enable home owners, and prospective home owners, to make informed choices by being fully aware of their rights and responsibilities in their relationship with park owners.”
The Act promotes "fair trading practices", for example by:
a) declaring particular rights and obligations of the park owner, and home owners, for a residential park; and
b) facilitating the disclosure of information about a residential park, and this Act, to a prospective home owner for a site.
Other “important objects” of the Act include:
a) encouraging the continued growth and viability of the residential park industry in the State;
b) providing a clear regulatory framework to ensure certainty for the residential park industry in planning for future expansion.[12]
[12] Manufactured Homes (Residential Parks) Act 2003, s 4.
The parties’ submissions
The home owners say in Annexure A to their response and counter application:
a) "Section 73 does not provide a vehicle for the transfer of the service fee to the site rent.
b) Under the terms of the site agreement site rents were increased by 5% on 1 February 2012 and this should be taken into account.
c) If the applicant is successful in gaining the site rent increases applied for, site rents in Sugar Coast Village will (have) increased from $608.05 to $653.75 a month inclusive of GST. That is an increase of $45.70 or 7.52% and the applicant will have obtained three rent increases in the space of a few months.
d) The applicant has failed to produce any evidence to show that he has an entitlement to the service fee or any other amount."
The home owners go on to say in Annexure B to their response and counter application:
a) “If the applicant wishes to recover the costs of maintaining the park’s electricity infrastructure, reading meters and producing electricity invoices he must do so in accordance with the provisions of the Act regarding site rent increases. The applicant is no longer able to claim the ‘service fee’ as a right under the Electricity Act 1994.
b) The applicant has not disclosed from where he obtains the bulk supply or the rate per kwh he is charged. Without that information homeowners cannot be sure that they are being charged correctly, especially when there are different rates for peak and off peak consumption.
c) The applicant may be in breach of the Act for continuing to charge in accordance with the ready reckoner from 1 March 2011 until 1 December 2011.
d) A further complication has arisen with the increasing number of solar power installations on homes within the village. Under the present metering regime it is impossible to determine the amount of surplus power going to the electricity grid...the surplus power is being offset against the bulk supply to the village.....it reduces the Applicant’s bulk supply bill, and at the same time allows him to sell the equivalent of the surplus to home owners thus giving a double benefit to the Applicant.”
e) They are concerned that the site agreement which is annexure 4 to the park owner’s application is not representative of the site agreements generally in force in the village.[13] They say that the more common form of site agreement in Sugar Coast relocatable home estate is the agreement which is annexure C to the home owners’ response and counter application.
f) Because the site agreements provide for a rent increase of 5% or CPI whichever is the greater, site rents in Sugar Coast Village are rapidly becoming unaffordable, especially for single pensioners. A balance of fairness needs to be restored between the rights of park owners and home owners respectively.
[13] Annexures 3 and 4 of park owner’s application.
Reasons
Can park owners charge home owners for “ancillary” utility costs, such as the tariff 11 service fee, after the commencement of s 99A on 1 March 2011?
Provided home owners have agreed to an electricity on-supply arrangement in their site agreement, I consider that they are bound to pay the nominated tariff 11 service fees, to the extent that those fees have not been modified by the Act. As with other on-supply arrangements in other industries, it is not necessary for the agreement to state expressly that service fees are payable. In any event, as the park owner points out, the owners accepted that the fee was payable when it was being levied as a separate charge, and all that has changed is the charging method.
The home owners say that “The applicant may be in breach of the Act for continuing to charge in accordance with the ready reckoner from 1 March 2011 until 1 December 2011.”
It seems that the park owner has contravened s 99A in two respects:
i) The maximum charge rates for electricity consumption were based on the superseded notional fee in tariff 11 rather than the new “actual cost” formula in s 99A(2).
ii) It charged owners separately for an electricity service fee in accordance with Tariff 11, when s 99A prohibited the levying of a service fee as a separate charge.
In relation to the latter issue, it is significant that s 99A does not prohibit ancillary utility charges absolutely. Rather, by limiting separate utility charges to charges for utility consumption, s 99A only leaves one avenue for the park owner to recover other on-supply costs, namely the site rent.
As outlined above, the Department’s letter to park owners following the introduction of s 99A anticipates that park owners may turn to the site rent as a substitute vehicle for levying the utility charges which cannot be levied as a separate charge by virtue of s 99A. The letter says that “The site rent charged to home owners should include a component to cover the legitimate costs of providing utility infrastructure within the park.” This suggests that “utility infrastructure” charges are the only charges which can be transferred to site rent following the introduction of s 99A, which is not the case.
As outlined earlier, the charging rules in s 99A do not purport to apply to any utility charges which form a part of the site rent. There does not appear to be any other basis in the Act for restricting what park owners can charge (by agreement or pursuant to an order of the Tribunal), by way of a utility charge in the site rent. The only restrictions are those which are imposed, for example by any other utility charging rules such as the prevailing provisions of tariff 11 for electricity.
This outcome may appear to undermine some of the fair trading aims of s 99A, insofar as it merely shifts the objectionable ancillary utility costs from one vehicle to another. However s 99A does achieve a fair trading purpose because the park owner can only include the ancillary charges in the site rent by agreement with home owners or pursuant to an order of the Tribunal. “Hidden charges” become more transparent and open to scrutiny by owners and the Tribunal and to negotiation between the parties.
How much can park owners charge home owners for utilities in site rent?
The spirit of s 99A is to prevent park owners from making a “profit” from the on-supply of utilities in manufactured home parks, not to prevent them from recovering the legitimate costs of on-supply.[14] One of the important objects of the Act is encouraging the continued growth and viability of the residential park industry in Queensland. However this prohibition does not apply expressly to utility charges in site rent, perhaps because they can be moderated in other ways, including by negotiation, scrutiny by the Tribunal and competition between parks. I am satisfied that the principal target of s 99A was not regulated service fees such as tariff 11 which seek to reimburse owners for administering the on-supply arrangement but unregulated fees which left the park owner unaccountable.
Must the electricity service fee reflect the actual cost of administering the on supply arrangement?
[14] Explanatory notes to s 99A.
The parties’ submissions are based on the premise that the park owner must establish that the service fee is reasonable. The home owners say the fee is excessive. The park owner says the administrative impost of the on-supply arrangement as follows:
a) Reading the individual electricity meters every month – 1 hour;
b) Preparation of utility invoices – 5-6 hours;
c) Collecting and accounting for account payments – 2 staff members 9-12 noon on the first day of each month (although it acknowledges that the rent is also collected at that time);
d) The company is required to insure the money collected on behalf of the electricity supplier.
Section 99A only ousts parts of Tariff 11 when electricity charges are levied separately. When utility charges are factored into the site rent the park owner is thrown back on calculating electricity fees with reference to the relevant maximum charges in Tariff 11. As an on-supplier of electricity the park owner may elect to charge up to the maximum service fee in Tariff 11 in site rent, regardless of what it actually costs to administer the agreement, unless the site agreement provides that a lesser amount be charged.
In other words, while the cost of administering the on-supply arrangement may be the starting point for most applications for utility fee increases under the Act, in the case of electricity, the Tariff 11 service fee has already been assessed and declared by the Queensland Competition Authority as an appropriate maximum service charge. The tariff 11 service fee is designed to compensate on suppliers of electricity for the cost of administering the on-supply arrangement, for example, reading electricity meters, invoicing, collecting payments and accounting to the supplier. Although the fee cannot be levied as a separate charge, manufactured home park owners should otherwise be in the same position as other suppliers of electricity in Queensland, who are at liberty to charge up to this legislated maximum service fee for administering their on supply arrangements. I think that in the case of electricity the Tribunal should not impose its own assessment of what is reasonable in lieu of the notified fee.
Both home owners and the Tribunal would need to be satisfied of course that any proposed transfer of electricity or other utility charges to site rent stems from a separate charge, rather than being an amount which is already incorporated into site rent, to prevent “double dipping” by the park owner.
“If the applicant wishes to recover the costs of maintaining the park’s electricity infrastructure, reading meters and producing electricity invoices he must do so in accordance with the provisions of the Act regarding site rent increases.”[15]
[15] Home owners’ submission.
Having determined that the park owner is entitled to charge the electricity service fee, it can continue to charge the owners who have agreed to pay the service fee as part of the site rent.
The next issue to consider is whether, in the absence of agreement between the parties, there is a mechanism in the Act for the service fee to be transferred to the site rent. The Act is prescriptive about the ways in which site rent can be increased.
The Act regulates the ways in which site rent can be increased or reduced
The park owner must establish that it is entitled to increase the rent under Part 11 of the Act which regulates variations to site rent:
a)Division 2 – Increase in site rent provided for in site agreement, or
b)Division 3 – Other way of increasing site rent (sic).
The mechanism the park owner has relied on for adding the service fee to the site rent is evidently misconceived. It says that it has legal advice that “this matter will be decided on the interpretation of the Manufactured Homes (Residential Parks) Amendment Bill 2010, clause 22, section 73.[16] The home owners point out that the bill was never passed, and in any event, “s 73 is part of Division 4, which deals with reducing rent, not increasing it.”
[16] Applicant's statement of evidence, page 1.
I dismiss the park owner’s application pursuant to s 73 of the Act for an increase in site rent.
The park owner says in its letter to owners advising of the proposed rent increase that it has “legal advice that (some of the) residents who are party to a form 2 site agreement are obliged to pay the increase because a clause in the agreement “covers the change”.[17] If this is the case the park owner may not also make an application for an increase under part 3.[18] While the park owner does not refer to s 69, it states as follows:
69 Notice of increase in site rent
(1) This section applies if a site agreement—
[17]The park owner says in its letter to owners that the older version of the form 2 agreement does not contain this clause.
[18] Section 71(1)(b).
(a) provides for an increase in the site rent payable under the agreement; and
(b) states how the amount of the increase is to be calculated.
The park owner has mentioned s 69 in his application as the basis for the proposed increase. The affected owners have not made submissions in response, so I am not satisfied that they have been afforded natural justice on this point. Further, the provision in question, apparently clause 15A(2)(b) of one version of the park’s form 2 site agreement, purports to sanction rent increases for “any new or amended levy or tax charged by the local, State or Federal Governments”. I am not satisfied that this provision justifies increases in site rent as a result of the introduction of s 99A, which does not result in a “new or amended levy or tax”. Section 99A merely changes the way the park owner can charge for utilities.
In summary, the park owner can charge the Tariff 11 fee as part of the site rent by agreement with home owners. In the absence of agreement, the Tribunal cannot make an order increasing the site rent unless the park owner can satisfy the requirements of ss 69 or 71 of the Act. The latter includes a reference to “significant increased operational costs in relation to the park, including significant increases in rates, taxes or utility costs for the park". Again however, it is not clear that s 99A gives rise to circumstances which justify an increase under s 71.
Home owners’ access to the park utility invoices.
The home owners have sought access to information about each of their utility bills, to enable them to make an informed assessment about whether the bills comply with the new charging rules in the Act. “The applicant has not disclosed from where he obtains the bulk supply or the rate per kwh he is charged. Without that information homeowners cannot be sure that they are being charged correctly...”
The Act does not require park owners to provide copies of utilities invoices to home owners. Nevertheless, one of the main objects of the Act is “to enable home owners.... to make informed choices by being fully aware of their rights and responsibilities in their relationship with park owners.” Park owners cannot make informed choices unless they have access to the invoices which are evidence of the “amount charged by the relevant supply authority for the quantity of the service supplied to, or used at, the site.”
I order that at the same time as the park owner gives home owners their utility bills, it must make copies of its supplier’s utility invoices available for inspection at the park office, provide a copy to the home owner’s association, and post a copy on the park notice board free of charge. Individual owners are entitled to obtain their own copy either from the home owners’ association or from the park owner, without a fee, but on payment of a photocopying charge calculated at commercial rates.
“February 1 2012 site rental increase”
The park owner has sought an order that “all home owners pay the percentage difference caused by the 5% rental increase that came into effect on February 1 2012, so all residents are paying the same monthly rent.” The park owner does not say whether the increase was a result of an order or whether it increased the rent pursuant to a term of the site agreement. If it is the former, the park owner should seek to enforce that order. If it is the latter, the park owner must satisfy the Tribunal that the increase is payable by each owner under each of the different versions of site agreements in use in the park.
Solar power
As a side issue the home owners raise the emerging issue of accounting for solar power in manufactured home parks where they allege excess power is “fed back into the grid. Under the present metering regime it is impossible to determine the amount of surplus power going to the electricity grid...the surplus power is being offset against the bulk supply to the village.....it reduces the Applicant’s bulk supply bill, and at the same time allows him to sell the equivalent of the surplus to home owners thus giving a double benefit to the Applicant”.
The charging regime in the Act does not provide any specific guidance to stakeholders on the treatment of solar power. Home owners and park owners can of course agree on how solar power is to be accounted for. This is a complex issue which cannot be resolved without a full exploration of the issues, and there is insufficient material before the Tribunal to enable me to make a decision on the papers.
Related application OCL121-11
The park owner has made a related application OCL-121-11 to the Tribunal seeking additional increases to site rent, based on s 71 of the Act. The park owner says that “it makes good economic sense” to hear both applications together. This was a sensible proposal, as all applications to the each of the substantive issues raised by the parties in this matter have been resolved, and all applications for site rent increases should be determined at the one time to give the decision maker a holistic view. However the substantive issues in this case have now been determined so it is at an end.
If the park owner wishes to make an application pursuant to s 71 to explore whether it can increase site rent to cover the tariff 11 service fee, it should seek leave to amend its application in OCL121 of 2011 accordingly.
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