Tamberra Pty Ltd as trustee for the Max Ahlfeld Family Trust v The Home Owners Committee, Jones
[2013] QCAT 299
| CITATION: | Tamberra Pty Ltd as trustee for The Max Ahlfeld Family Trust v The Home Owners Committee, Jones & Ors [2013] QCAT 299 |
| PARTIES: | Tamberra Pty Ltd as trustee for The Max Ahlfeld Family Trust (Applicant) |
| v | |
| The Home Owners Committee Ms Jane Jones Lee Evans Maureen Wall Ms Ingrid Behaike Nick & Bev Henningsen Mr & Mrs Wragg Mr & Mrs Kilbride Ms Marjorie Hindmarsh Mr Stan Clarke Brian John Carson Ms Janet Beardsmore Ms Beth Collins Mr & Mrs Higson Ms Wilma McFadden Ms Carol Spencer Ms Denise Sloey Ms Lynda Brown Ms Stella Joyce Anderson Mr Doug Bryant Ms Stephen & Brenda Carney Pat Lake Mr Colin Whitley Effie and John Wright Lyn and David Squire Mr Bill Griffijn Mr Brian & Lorraine Keegan Ian and Jan Bails Mr Dale Siedenburg Colin and Joyce Byrne Ms Sue Murray Mr Anthony Sheil Joseleen Merle Kien Mikhail Ltakh Lindsay & Marie Forrest Frances Robinson Gwen Harris Colin Appleby Dennis & Vera Jackson Len Starr Len & Sylvia Morley Jelena and Roger Neilsen Mr Steve Glass Ms Grace Mellers Ms Carmel Keene Ms Annette Elliott Mr Simon Morley Fay Dermody Mr Rex A. Collins Ms Diane Warren Ms Lois Fitzgerald L. Lewis Selwyn & Phyllis Schulz Ms Janet Bond Mr Tony Small Margaret and Ken Grant Leslie & Shirley Bowie Mr Frank Dunn Beverley Manning (Respondents) |
| APPLICATION NUMBER: | OCL121-11 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | 27 March 2013 |
| HEARD AT: | Hervey Bay |
| DECISION OF: | David Lewis, Member |
| DELIVERED ON: | 20 June 2013 |
| DELIVERED AT: | Hervey Bay |
| ORDERS MADE: | 1. The park owner’s application for an increase in site rent on the basis of an increase in rates is dismissed. 2. The park owner’s application to amend the site agreement to include provision for an automatic site rent increase on any increase in rates is dismissed. 3. The park owner’s application for an increase in site rent to reimburse the cost of electricity administration is dismissed. 4. The park owner must reimburse to all home owners the service fee charged after 1 March 2011, except, with respect to those home owners who have agreed to pay the extra charge as site rent, from the date they so agreed. 5. The home owners’ application to set aside the special terms of the site agreement is dismissed. 6. The home owners’ application to set aside the park rules is dismissed. 7. The home owners’ application to limit any future site rent increases to changes in the Consumer Price Index is dismissed. |
| CATCHWORDS: | Manufactured homes – claim for increase in site rent to cover significant increased operational costs – rates increase – claim to include a formula for automatic future increases – claim for increase in site rent to cover previous electricity service charge - home owners claim for reimbursement of service charge - application to set aside special terms and park rules – claim to vary site agreement as to rent increases – whether rent increase provisions are special terms. Manufactured Homes (Residential Parks) Act 2003, sections 16, 17, 19, 20, 21, 22, 25, 69, 70, 71, 99A. |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Tamberra Pty Ltd represented by Mr Max Ahlfeld, director. |
| RESPONDENT: | All Respondents represented by Mr Leslie Bowie. |
REASONS FOR DECISION
Sugar Coast Relocatable Home Estate is a residential park operating under the Manufactured Homes (Residential Parks) Act 2003 (the Act), situated in Urangan, a suburb of Hervey Bay.
The Applicant Tamberra Pty Ltd (Tamberra) is the park owner. The Respondents are the home owners and the Home Owners Committee. Tamberra has operated the park since 1995.
Tamberra commenced an application in September 2011 seeking an increase in site rental from 1 November 2011, on the basis of what it said was a significant increase in local authority rates for the park.
It also sought an order to the effect that should the rates increase in any year by a figure exceeding 15% of the amount by which the site rental had increased, that additional sum be added to the charges payable by the home owner, without the necessity of a fresh application to the tribunal for approval of the increase.
The Respondents opposed the application. They also took the opportunity to seek various other orders, namely
a)That the special terms in the site agreements be set aside;
b)That the park rules be set aside; and
c)That future rent adjustments be limited to increases in the Consumer Price Index.
To complicate matters further, the Applicant sought an order which would allow it to increase the site rental by an amount designed to compensate it for the loss of its service charge for the on sale of electricity, that having been outlawed by the inclusion of section 99A in the Act from 1 March 2011. This claim was not part of the application as filed, but had been the subject of a parallel application, OCL142-11. In that matter the tribunal had refused the application, but had left the door open to Tamberra to join it to this matter for further consideration.
The Respondents in turn sought that the payments of the service charge paid from March 2011 when it became illegal, until November that year when the new illegality became known to the parties, be refunded.
Finally, the Applicant had sought orders against one of the home owners concerning the due date for certain payments, but as that owner was about to vacate the park, that claim was not pursued. Nonetheless there were some six issues to be decided in addition to the primary one concerning the rates increase.
Claim due to increase in rates
Section 71 of the Act provides for the park owner to seek an increase in site rent outside the provisions of the site agreement if the increase is necessary to cover significant increased operational costs, including significant increases in rates. If the home owners do not agree to the proposed increase, as here, the park owner can apply to the tribunal for an appropriate order.
Tamberra sought its increase because of the increase in rates from the 2010/11 year to the 2011/12 year. In 2010/11, the net rates for the park had been $105,806.62, or for each of the 80 sites, $110.21 per site per month; in 2011/12 the total was $117,597.38, or $122.50 per site per month.
The increase being sought from the owners was $6.53 per site per month. That was arrived at in the following way: Tamberra calculated that the rates per site were 21% of the site rental (in 2011/12). The annual increase in site rentals had been applied in February 2011, the increase being $27.45. 21% of that equalled $5.76 and therefore, it reasoned, $5.76 of the site rent increase could be applied to rates. The total increase in rates per site was $12.29, and accordingly the difference of $6.53 was claimed.
In percentage terms, the rates had risen by 11%. The site agreements provided for a fixed annual increase in site rent of 5%.
In support of its case, Tamberra produced figures for the 10 years from 2001. In that time, rates had risen from $49019 ($51.06 per site per month) to $117597 ($122.50), an increase of about 140%. Over the same period, site rent per site per month increased from $327.86 to $576.36, or about 75%. On that basis it submitted that it was subsidising the home owners with respect to rates in an amount of $71.44 per month, ie the whole of the increase over that period. This is of course inconsistent with the methodology by which it calculated the amount claimed, but in the event that does not matter.
Tamberra also sought to support its claim by filing newspaper and like articles suggesting that the cost of rates and various other costs like insurance were likely to rise by very substantial amounts, and a circular from an Opposition Member of Parliament claiming price rises allegedly due to the carbon tax. It tendered an article by a valuer suggesting a formula ought be used for rent increases which would factor in increases in council charges, and proffered information asserting a number of business failures in the manufactured homes industry.
It also produced figures for rentals in other parks in the locality, suggesting these parks had higher site rents.
The Respondents argued that the park owner had enjoyed rent increases of 5% per annum since it purchased the village in 1995, while the Consumer Price Index increases were much lower than that over that period. They calculated that if the claim was granted, then after adding that to the annual increase in February 2012, site rent would have increased by 7.5% for the year, that is much higher than the CPI.
They asserted that the disclosed income of the park omitted income received from sales of houses or from rent on the on-site shop. The Applicant asserted these were irrelevant to the question.
They also claimed that the facilities at Sugar Coast Village were inferior to those at other local parks, and that therefore any comparisons with rental at those parks were not to be relied on. On their figures they claimed that the rents at the other villages were comparable in any event. They claimed that facilities had declined, again a matter disputed by the park.
Section 70(3) of the Act sets out a range of matters that the tribunal may have regard to in considering any application about the annual site rent review.[1] Section 71(9) provides that in deciding an application for an increase based on significant operational costs, as here, the tribunal may have regard to the matters in section 70(3)(d) to (l). These include the frequency and amount of past increases, and any increase in the CPI during the previous site rent period, as well as additions or withdrawals of facilities, any increase in operational costs, whether the increase is fair and equitable, and any other matter the tribunal considers relevant.
[1] Under section 69.
Comparisons with other parks are referred to in section 70(3)(a), and so are not included in the section 71 factors, unless caught by the “any other matter” provision. However such a comparison is in effect a market review[2] and section 71(2) prohibits basing this proposed increase on a market review.
[2] See the definition of market review of site rent in the Dictionary for the Act.
The real focus must be on the burden of the increase in operational costs, in the context of other rises in site rent. A comparison is instructive.
As mentioned above, the Applicant’s figures claimed that in the 10 years to 2011, rates had increased by 140%, but site rent by only 75%. In the same period, the CPI increased from 132.4 to 181.4, or 37%. On the face of it then, site rent had increased by about twice the CPI, which should have provided a buffer against any increase in rates, even where that increase was much higher than site rent or CPI.
A close examination of the Applicant’s figures confirms that. Expressing all figures as per site per month, in 2001, his site rent was $327.86, and the rates were $51.06. He therefore had $276.80 left after payment of rates, that figure being available for the balance of expenses plus profit. In 2011, the rent was $576.36 and the rates were $122.50, leaving $453.86 for other expenses and profit. This surplus after rates had therefore increased by $177.07, or 63.4%. This compares with the CPI rise of 37%.
Put another way, the park would have needed an increase of only $102.41 to keep pace with inflation. It had therefore an extra $74.66 to meet any extraordinary expenses. This of course is after the extra charges for rates (the basis of the claim) have been paid for. Viewed in this light it is hard to see that the park owner has made out a case for an increase based on a significant rise in operational costs.
In the 12 months from August 2010 to August 2011 the increase of rent after payment of rates still exceeded the CPI increase, albeit only marginally. Nonetheless even over this period when the rates increases were higher than usual, the CPI comparison shows that the overall result meant that the park owner did not go backwards.
Mr Ahlfeld for Tamberra raised two objections to this analysis. The first was that under section 71, he was entitled to claim an increase if he could show that there had been a significant increase in rates, there had been such an increase, and therefore he should be awarded the rent increase. This assumes that a significant rates increase is all that needs to be shown. The section does not say that, and indeed such an interpretation would be inconsistent with subsection (9) which sets out the other matters the tribunal may take into account. The significant increase provides the standing to bring the claim, but it is not conclusive.
Secondly he said that such an analysis was flawed as it assumed his other costs had increased only comparably with the CPI, whereas he claimed they had increased much more. Unfortunately he did not advance any evidence that this was so, apart from the newspaper and similar articles earlier referred to. This material would be inadmissible in a forum bound by the rules of evidence[3] and while the tribunal is not so bound, the reasons for excluding such material are still relevant here. In any event it related to national trends, and could not afford any useful information about the specific position of the subject park.
[3] Under the hearsay rule and possibly under the rules relating to opinion evidence.
Tamberra could have produced its financial statements, but did not want to do so. Mr Ahlfeld said that no commercial operation provides such information to its customers. While one can appreciate the reasons he might want to keep this information confidential, his difficulty is that in a business where his charges are regulated, he must somehow persuade the tribunal that he can justify his claim. His expenses may well differ from the trends in analyses such as the Consumer Price Index, but in the absence of other reliable and objective evidence, the CPI is the best available indicator of increases in them.
On the basis of what information was available, the clear conclusion must be that the annual increases in site rent have been sufficient to allow for significant increases in rates, and accordingly Tamberra’s application in that respect will be refused.
It follows that Tamberra’s application to build in a formula for future adjustments will also be refused. In any event such a formula would be contrary to the clear intent of section 71, which allows for the home owners to agree or disagree, and if necessary for the tribunal to determine the issue.
The electricity service charge issue
The park owner is an on supplier of electricity. It receives a bill from Ergon for all power used at the park, and in turn charges the sites (which are individually metered) for their own consumption. Until 2011, the park owner had levied a service charge in addition to the consumption charge, to cover the cost of reading the site meters and calculating, billing, and collecting the individual charges. The Act was amended in 2011 to include section 99A which prohibited such service charges. The effect is that those costs must now be met out of the site rent.
Tamberra continued to levy the service charge until November 2011 when it became known that the levy was unlawful. It then sought to add the equivalent amount to the site rent. Some owners agreed, some did not. Tamberra now seeks an order to allow it to charge those who have not agreed.
This matter was previously raised by Tamberra in Application OCL142-11[4] where the Applicant sought an order based on section 73 of the Act. Hearing of the subject application was adjourned pending a decision on that matter. The Tribunal gave a decision on that in November 2012, dismissing the application under section 73, and concluded that, in the absence of agreement, the tribunal cannot order an increase unless the park owner can satisfy sections 69 or 71[5]. As this application was current, the Tribunal suggested that Tamberra could amend this application to include the claim pursuant to s 71.
[4] Tamberra Pty Ltd as trustee for the Max Ahlfeld Family Trust Sugar Coast Relocatable Homes v Murray and Ors [2012] QCAT 553.
[5] At paragraph 49.
Notwithstanding that she did not make a decision on the point, the Member doubted that such an increase fell within s 71, given that that section refers to significant increased operational costs. I agree with that view. It is hard to see that a legislative ban on a particular cost recovery is an increased operational cost.
The Applicant relied on a letter from the Director-General, Department of Communities, to park owners addressing the section 99A implications. In that letter she said should the park owner need to increase site rent to cover the costs outside the terms of the site agreement they may do so following the procedures of the Act. Unfortunately she did not specify what procedures she had in mind. Section 71 does not seem applicable to that exercise.
The park owner apparently raised section 69 in the earlier application. He relied on a provision of the agreement allowing for an increase for “any new or amended levy or tax…” in clause 2(b) of his special terms. The Member was not satisfied that this claim fell within that provision.
The section 69 argument was not raised before me directly, but I would have agreed with the earlier decision on that point.
Is the park owner therefore left without remedy, notwithstanding the Director-General’s advice? In my view, a remedy could only be achieved by an amendment to the site agreement itself, to include a provision allowing a rent increase in circumstances including these, and then followed by a rent increase claim under section 69. For reasons I will deal with shortly, I do not think it is appropriate to decide on the issue of that amendment in these proceedings.
Before leaving this aspect of the proceedings, I note the Respondents seek an order for repayment of the service charges where they were paid after the commencement of section 99A in March 2011. Except for those home owners who agreed to it, those charges could not lawfully be claimed. This question came before the tribunal in Bribie Pines Island Village Home Owners Committee v Palmpoint Enterprises Pty Ltd.[6]In that case the member found that the charges were refundable, as ignorance of a statutory obligation was not a legitimate reason for its non-compliance. I agree with the reasoning in that case, and will order accordingly. Any disadvantage to the park owner can be addressed as part of a later application as foreshadowed above.
[6] [2013] QCAT 94.
Orders sought by the Respondents
The Respondents sought orders setting aside the special terms in the site agreement, as well as the park rules, and limiting future rent increases to CPI adjustments.
Section 22 empowers the tribunal to vary special terms. If a party does not agree to a variation proposed by the other party, the other party can apply to the tribunal.
While the home owners proposed a variation to the special terms in their Response, they do not appear to have done so prior to that document, at least other than by way of various complaints about procedures. Other than seeking the setting aside of the terms, they have not set out what they would propose as reasonable alternatives. In effect they have simply tacked these matters on to their response to the Applicant’s substantive claim. While some aspects of these claims are related, the issues were not adequately addressed in this hearing by either party, partly no doubt due to time limitations.
The application to substitute CPI adjustments for a fixed percentage increase raises the threshold question of whether the tribunal has the power to amend the site agreement in this way. There is no general power in the Act for the tribunal to amend agreements, and the power must be found within one of the various specific provisions. The only likely one is section 22, if the rent increase provisions of the agreement can be categorised as special terms.
Special terms are defined in section 21 as terms that are not standard terms, or terms taken to be included under section 19. Standard terms are terms prescribed as such by regulation, of which there are none. Terms included under s 19 include home owners’ and park owners’ responsibilities under ss 16 and 17, and other duties imposed or entitlements given under the Act. While home owners’ responsibilities include paying the rent, the method by which it is varied under the agreement (as opposed to how this may be reviewed under Part 11) is not set out in any of the relevant provisions. Section 25 requires that the agreement sets out how the rent may be varied, but does not prescribe how that should be done, and therefore again that does not bring the specific provision under section 19.
The agreements for this park (at least for those entered into after 2004) follow the form developed by the Department, that is Form 2. It does not appear that this is a mandatory form. It is in four parts, namely a schedule which sets out names etc and matters particular to the agreement, part 2 referred to as “Terms of site agreement”, part 3 “Special terms” and part 4 for signatures.
The schedule includes a section where the method of calculating rent increases is set out. In the subject agreement, this section provides for the 5% fixed increase, but also refers to an annexure being part of part 3, where the other provisions about increases are set out. This annexure is entitled “Special Terms to Form 2 Site Agreement”. It is clear that it is this annexure that the Respondents refer to when they seek to have the special terms set aside.
Given that the matters set out in the schedule, at least relating to the basis for rent increases, are not standard terms, nor matters prescribed under section 19, they can only be special terms as well. It follows that they can be amended in accordance with the provisions of section 22, as of course can those matters set out in part 3 and its annexure.
Accordingly, any application to limit rent increases to the CPI falls to be considered under that section, as do the other of the Respondents’ applications, and potentially any application by the park owner to amend his rent increase provisions to enable him to include the costs previously covered by his electricity service charge.
I do not propose to make any orders amending the special terms in this decision, but leave that open to be dealt with in a more appropriate way at another time. As mentioned, the Respondents have not proposed the specifics of their desired amendments, except to the limited extent in their Response. Arguably the preconditions to the tribunal’s exercising its jurisdiction under section 22 have not yet been fulfilled. The issues were not addressed adequately by either party. Further, several of these issues will necessitate a consideration of the reasonableness of the site rent, or of any proposed change to that structure. It is more appropriate that this be addressed in separate proceedings after the parties have had the opportunity to set out their positions and proposals in detail, and where all relevant matters can be considered together.
I also note that these proceedings started in 2011, and deal with rates and other costs on figures which may now be well out of date. While one is conscious of the desirableness of disposing of issues in a quick and economical way, on balance all parties will be better served if these matters are left to another time.
With respect to the Respondents’ application to set aside the park rules, different considerations apply. Park rules are included in the agreement under section 19 and therefore are not special conditions. Part 13 permits a park owner to make park rules, but the provisions for challenging rules in the tribunal set out in Division 2 of that part are limited to objections to proposed changes to the rules. In this case, the tribunal’s power may be limited to making a declaration as to the lawfulness of a particular rule, rather than as to its reasonableness. Again this can more conveniently be considered as part of a properly prepared application dealing with the special terms.
To remove any doubt, I should make it clear that while the orders dismiss the various applications for setting aside or varying terms of the site agreement, this decision should not be seen as deciding that issue in the case of subsequent applications dealing with the same subject matter after the appropriate processes have been observed.
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