Wadley Properties No.1 Pty Ltd v Williams and Ors
[2012] QCAT 581
•15 November 2012
| CITATION: | Wadley Properties No.1 Pty Ltd v Williams and Ors [2012] QCAT |
| PARTIES: | Wadley Properties No.1 Pty Ltd trading as Big 4 Brisbane Northside Holiday Village (Applicant) |
| v | |
| Sylvia Williams Eunita Davis Robert Ward Carol Ward (Respondents) |
| APPLICATION NUMBER: | OCL141-10 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | 13 August 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | John Bertelsen, Adjudicator |
| DELIVERED ON: | 15 November 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The site rent increase effective from 8 October 2010 is reduced from $175.00 per week to $150.00 per week. 2. The applicant shall refund to the respondents any overpayment of site rent that may have been made since that time. |
| CATCHWORDS: | Market rent review – manufactured homes – increase in site rent Manufactured Homes (Residential Parks) Act 2003, ss 69, 70, 71 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Mr Warren Wadley |
| RESPONDENT: | Robert Ward and Carol Ward, Sylvia Williams and Eunita Davis (by phone), Ray Smith assisting |
REASONS FOR DECISION
Introduction
The applicant as the registered owner of the “Big 4 Brisbane Northside Holiday Village (“the Park”) at 763 Zillmere Road, Aspley seeks an increase in the site rent applicable to the respondents' manufactured home sites.
The park is a mixed use park consisting of manufactured home sites, short term tourist sites, tent sites and short term rental accommodation. The park is a residential park for the purposes of the Manufactured Homes (Residential Parks) Act 2003 (“the Act”).
On or about 31 July 2010 the applicant issued to the 19 manufactured home sites at the park at that time notice of increase in site rental. Thirteen agreed or moved on with the remaining 6 who did not agree to the increase initially named as respondents to this application.
On 19 September 2010 the applicant applied to the Tribunal for confirmation of the site rent increases from the date nominated in the notices to increase rent, namely 8 October 2010, the 6 initially named respondents having disputed or having been deemed to have disputed the rent increase.
Since the time of filing of the application 3 respondents have resolved their issues with the applicant. For hearing purposes there are 3 respondents namely Robert and Carol Ward, Sylvia Williams and Eunita Davis. Some delay in hearing this application has been caused by termination disputes the subject of 3 other applications involving the same 3 respondents. At the date of this hearing none of those applications have been resolved or finalised.
Legislation
Subsequent to the filing of this application the Act was, for the purposes of this application, amended on 19 November 2010. This application is made pursuant to section 71 of the Act. The determinative factors for rent increase are recited in section 70 of the Act. Pursuant to section 172 transitional provisions of the Act as it now stands this application is to be determined in accordance with sections 70 and 71 of the Act “as if the amending Act had not commenced”. For clarity pre amendment section 71 and section 70(3) (being the relevant portion of section 70) are set out hereunder:
70(3)In deciding the application, the tribunal may have regard to the following–
(a)the range of site rents usually charged for comparable sites in comparable residential parks in the locality of the Park, or if there are no comparable residential parks or sites, the range of market rents usually charged for residential accommodation in the locality;
(b) the increased site rent compared to the previous site rent;
(c) the frequency, and amount, of past increases in the site rent payable under the agreement;
(d) any increase in the CPI number during the previous site rent period;
(e) the amenity or standard of the common areas and communal facilities;
(f) any withdrawal of a communal facility or service previously provided at the Park;
(g) any addition of a communal facility or service not previously provided at the Park;
(h) any increase in the Park owners operating costs for the Park during the previous site rent period;
(i) whether the increase is fair and equitable in all the circumstances of the case;
(j) anything else the tribunal considers relevant.
71Notice of proposed increase in site rent
(1) This section applies if—
(a) the park owner for a residential park wishes to increase the site rent payable under a site agreement; and
(b) section 69 does not apply to the proposed increase.
(2) The park owner must give the home owner for the site a notice stating the following—
(a) the amount of the proposed increased site rent;
(b) the basis for the proposed increase;
(c) the day the proposed increased site rent is first payable (the increase day);
(d) the home owner must, within 28 days after receiving the notice, give the park owner a written response indicating whether or not the home owner agrees to the proposed increase.
(3) The increase day must not be earlier than 2 months after the notice is given.
(4) The home owner must within 28 days after receiving the notice give the park owner a written response indicating whether or not the home owner agrees to the proposed increase.
(5) If the response indicates the home owner agrees to the proposed increase, the proposed increased site rent is first payable on the increase day.
(6) If the home owner does not give a written response under subsection (4) within the 28 days, the home owner is taken to have not agreed to the proposed increase.
(7) If the park owner and home owner do not agree on the proposed increase within the 28 days, the park owner may apply to the tribunal for an order about the proposed increase.
(8) In deciding the application, the tribunal may have regard to the matters mentioned in section 70(3).
(9) Also, in deciding the application, the tribunal may make any of the following orders—
(a) an order reducing the amount of the proposed increase by a stated amount;
(b) an order setting aside the proposed increase;
(c) an order confirming the proposed increase on the conditions, if any, the tribunal considers appropriate.
Evidence
The respondents queried in the first instance whether the applicant was able to apply for site rent increase pursuant to section 71 of the Act at all given that their agreements provided for CPI increases only. In Palm Point Pty Ltd v The Residents of Bribie Pines Island Village & Ors [2007] QDC 130 Dearden DCJ clarified any doubts on that score stating:
“In my view, as I have outlined above, MHRPA section 69 provides for park owners to seek to increase the site rental pursuant to a site agreement that contains provisions for increasing the site rent, whereas MHRPA section 71 is a provision which enables park owners to seek to increase site rent either outside the terms of any such site rent increase provision, but also covers the unlikely event of a park owner seeking to increase site rent either where no written site agreement exists, or where there is a written agreement, but it does not contain a site rent increase provision.”
Whilst that decision may not apply to the Act as amended it does apply to the Act prior to amendment ie to this application. It is clear that the applicant is entitled to seek the rent increase as it is sought in terms of this application.
Whilst there was some controversy as to the manner of personal presentation of the notices of increase in rent the validity of the notices was not otherwise disputed.
Pursuant to section 71 of the Act the onus of persuading the Tribunal that the proposed increase in rent ought be confirmed resides with the applicant.
The applicant relied primarily on its written submissions.
The pre amendment version of subsection 71(8) permits the Tribunal to have regard to those matters mentioned in section 73 as follows:
Range of site rentals usually charged for comparable sites in comparable residential parks in the locality of the park.
Two such comparable parks were identified by Mr Stanaway, certified practising valuer, in his report dated 27 September 2010 namely Colonial Village, corner Beams and Handford Roads, Taigum and Golden Downs 462 Beams Road, Fitzgibbon. Mr Stanaway determined that market site rentals at the park ought to be between $155.00 and $175.00 per week including sewerage charges depending on site size. However as pointed out previously in Tribunal decisions it is not for the Tribunal to determine market rent but rather for the Tribunal to consider the “range of site rents… for comparable sites… in the locality”.
Colonial Village sites are smaller but with individual sites not delineated. Facilities are generally similar but with some additional facilities to those at the applicant’s park. Golden Downs sites are also smaller but while facilities appear superior e.g. including 2 swimming pools and a community hall, they service 234 manufactured home sites whereas the number of manufactured home sites in the applicant’s park only numbered 20.
Colonial Village average rental in September 2010 was identified as $170.00 per week. Golden Downs average rental in September 2010 was identified at $157.95 per week.
Mr Stanaway’s report is relevant in that it identifies the range of site rentals being charged generally for comparable sites in comparable residential parks in the locality. The respondents did not dispute Golden Downs rent at $157.95 as at 1 September 2010. In fact, they stated that as at 1 October 2011 rent, upon their inquiry, was quoted at $165.30 per week and that all sites pay the exact same sum. This information was proffered to suggest that such was an increase of 5% only. The respondents further asserted that the facilities far exceeded what was available at the applicant’s park and at a lower cost at what the applicant wished to charge them. As pointed out additional facilities might well be expected and could well be correlated to the very much larger number of manufactured homes which those facilities serviced. It cannot be said that the mere existence of such facilities necessarily leads to a conclusion that facilities at Golden Downs are superior. However it is clear that there are additional facilities at Golden Downs indicative of superior services and facilities eg bus for shopping and workshop.
The respondents asserted that houses at Colonial Village otherwise appeared to be similar to houses at the applicant's park.
Section 70(3)(b) Increased site rent compared to previous site rent
There is a proposed increased from $125.00 to $175.00 per week in respect of two sites ie an increase of $50.00 per week or 40% and from $125.00 to $160.00 per week in respect of one site ie an increase of $35.00 per week or 28%.
The applicant asserted that it has only performed annual increases based on CPI except for September 2009 where no increase was notified at all. If CPI had been applied as at September 2009 and September 2010 respectively rent would have increased from $125.00 per week to marginally in excess of $131.00 per week (applying percentage increases of 1.9 and 3 or alternatively applying the increased index number from 170.8 in September 2008 to 179.1 in September 2010).
Section 70(3)(c) the frequency and amount of past increases in site rent
The applicant purchased the park in June 2007. Rent was increased in accordance with increase in CPI index in September 2007 and September 2008 at which latter time the rent was $125.00 for each of the 3 sites having increased variously from $98.30 and $112.00 such as to bring rents into alignment.
Section 70(3)(d) any increase in the CPI number during the previous site rent period
The previous site rent period commenced 13 September 2008. Relevant CPI numbers since that time are September 2009, 1.9, September 2010 2.9.
Section 70(3)(e) the amenity or standard of the common areas and communal facilities
The applicant asserted the standard of common areas and communal facilities had remained constant and in accord with, in particular, those facilities and services enumerated on pages 6 and 7 of Mr Warren Wadley’s statement.
The respondents asserted a diminution in standards in respect of the following:
(1)The boom gate had been broken for many months. Respondents stated that it was possible to drive through the gateway and over the grass verge and gain access to the rest of the park. They stated that they had witnessed vehicles doing this; that same had been reported to management; that nothing had been done. The applicant stated that whilst the boom gate may have been broken at times it had always been repaired and as at the date of hearing the boom gate was functional. That was not disputed.
(2)The respondents stated that the roadway was breaking up and required attention; that there were numerous potholes. The applicant stated that money had been spent to fix up the breakdown of the road surface; that same had been resealed and potholes repaired. It was not disputed that as at the date of hearing the roadway was functional to a reasonable standard.
(3)Build up of grime on the sides of the roadway. It was not clear when but according to the applicant a roadsweeper cleared up the roadside grime. There was no suggestion that it had been a problem since.
(4)Broken washing machines in each of the end two laundries. This was not denied but it was asserted by the applicant that it was not for the respondents to use these washing machines in any event. They were part of the caravan parks facility. The manufactured homes are self contained. It would only be in a case of emergency ie breakdown of owners' washing machines that these washing machines would be used. Respondents stated that in that event they would have to pay for the use of those washing machines in any event.
None of the above appear to constitute what might be termed a diminution in amenity or standard of any significance. The most that could be said was that some degree of tardiness has been exhibited in carrying out repairs or ensuring functionality of park facilities.
Section 70(3)(f) any withdrawal of a communal facility or service previously provided at the park
The applicant asserted that no communal facilities or services have been withdrawn. There was no evidence produced by the respondents to support withdrawal of any facilities.
Section 70(3)(g) any addition of a communal facility or service not previously provided at the park
The applicant stated no communal facilities or services have been added at the park. The applicant did not seek to rely on this factor in asserting the proposed rent increase. Respondents did not produce any evidence of any addition in facilities at the applicant’s park.
Section 70(3)(h) any increase in the park owners operating costs for the park during the previous site rent period
The applicant asserted increases in operating costs as follows:
(a)Local government rates and charges applicable to the park have increased in the 3 years from 2007 by $1,158.20 per quarter or 9.2%.
(b)Local government water charges applicable to the park have increased in the 3 years from 2007 by $1.02 per kilolitre or 74.5%. The applicant's last rates notice to include water charges was issued on 19 May 2010 for the quarter 1 April-30 June 2010 and totalled $15,917.15. The subsequent rates notice, being the first to not include water charges, for the quarter 1 July-30 September 2010 totalled $2,599.15. The first water charges invoice from Urban Utilities issued 29 July 2010 charges the applicant $17,208.43 for water consumption. This represents an increase of some 25%. Subsequent rates and water charges combined represent substantial increases in the same vicinity of that percentage increase.
(c)The applicant asserted the Department of Natural Resources and Mines land valuation for rating purposes in the park had increased over the past 3 years from $1,375,000 as at 1 July 2007 to $2,100,000 as at 1 July 2010 being an increase of 52.73%. As at 1 July 2011 the valuation is $2,500,000 making the total percentage increase from 1 July 2007 to 1 July 2011 81.82%. However, no evidence was produced which translated into an increased operating cost emanating from valuation revision other than the increased rates and water charges referred to in paragraphs (a) and (b) above. The respondents produced a letter in support of their own position from R D Adamson, certified practising accountant. He alludes to the limited relevance of land valuations.
(d)The applicant's operating costs were only disclosed in the context of rates, water charges and land valuation to the extent the last may affect the former two. Total operating costs were not disclosed. Rather, the applicant spoke in general terms about wages and awards, proposed increases in superannuation costs, risk ratings for insurance purposes, bulk electricity supply contracts, increased dump fees and security issues.
(e)The applicant summed up its position citing security and energy efficiency at the forefront of concerns. Electricity costs were quoted as “now losing $20,000 – used to make $40,000”.
(f)The applicant's evidence and supporting documentation is more suggestive of site rent increases based on comparative site rents in the area rather than being based on any specific increased operational costs of running the park.
There was no evidence as to where and how any real or perceived increase in operating costs was incorporated into other park revenue or the park's ability to meet these costs from revenue sources other than rent payable by the respondents. These 3 respondents number 3 out of well over 200 sites of various types located at the park. There was no material produced to the Tribunal supporting a diminution of net profit (and which could be correlated to increased operating costs appropo the respondents' sites).
Section 70(3)(i) whether the increase is fair and equitable
The language of this provision confers a wide discretion on the Tribunal to change, adjust or correct where consideration of all other factors might otherwise lead to an unfair or prejudicial outcome. Fair and equitable by logical implication involves a consideration of the position of each of the parties. Here the proposed increase is major – 40% and 28% and would place rent at the top end of comparable parks in the locality. There was no evidence of any significant addition to or diminution of park facilities or services. Reliance on CPI increases alone allow for only what might be considered a less than moderate increase. Even that appears to be conceded by the respondents who despite some discrepancies in calculations estimate $145.00 per week as fair (at least for the 2 larger sites) as an appropriate increased rent. Some discussion took place as to whether a rent differential ought to apply as between the 3 sites themselves ie 2 larger, 1 smaller and their positions within the park. Any difference is not significant enough to warrant rent increases in differing sums. It is fair to treat all 3 sites on the same basis.
Conclusions
Where there is an insufficiency of evidence or where it is impossible to calculate a dollar increase then it would be appropriate to set aside the notices of increase.
Whilst the evidence falls short on some criteria an increase is ascertainable even if primarily on the basis of the respondents' own evidence and calculations. The Tribunal accepts that the respondents have given their own estimate based on logical mathematical calculations generally in accord with increases already allowed for in terms of the agreements.
But as stated in Daleside Pty Ltd and Anor v Turney and Ors [2011] QCAT 240:
“The respondents have not provided any countervailing expert valuers report which makes it very difficult for the Tribunal to make findings contrary to the expert, particularly when the Tribunal has not inspected the subject park, or the five comparable parks. The respondents are therefore restricted to attacking the factual basis upon which the report stands, which they have attempted to do.”
In this instance a consideration of Mr Stanaway’s report and the “attack” lead to the conclusion that the comparable parks in the locality are superior to the subject park.
However it cannot be said that a fair rent payable is necessarily the market rent. One is not definitive of the other. The Tribunal accepts that the increased rent as asserted by the respondents is fair and equitable and warranted, that whilst some operating costs may have increased it is not clear or even apparent to the Tribunal the extent to which they impact on total operating costs, if at all, and that the report of Mr Stanaway suggests a substantially increased range of rents for inferior services and facilities. The rent proposed by the applicant exceeds that charged at comparable sites in the locality by some, on average $11.00 per week ($175.00 – ($170.00 + $157.95 / 2)). The applicant's proposed rent ought then at the least be reduced by that sum. Then given that the 2 relevant comparable sites are discernibly superior a further diminution in increase is warranted. Based on all the evidence concerning the 2 relevant comparable parks (but without the benefit of inspecting the park or comparable parks) a further diminution of 10% is discernible (the services and facilities at the parks being at least 10% superior).
Considering the range of site rents for comparable sites in the locality and taking into account that and all other section 70(3) matters the Tribunal concludes that an increase in site rent from $125.00 to $150.00 per week is warranted.
Orders
The site rent increase effective from 8 October 2010 is reduced from $175.00 per week to $150.00 per week.
The applicant shall refund to the respondents any overpayment of site rent that may have been made since that time.
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