Anderson v Kincumber Nautical Village Pty Ltd [2025] NSWCATCD 90;

1. The site agreement follows the form of residential site agreement prescribed by Sch 1 to the Residential (Land Lease) Communities Regulation 2015 (NSW) (the regulation), as in force in 2020. That form, consistently with ss 65 to 67 of the RLLC Act, provided for the selection between two options for the mechanism by which site fees might be increased: "fixed method" or "notice (non-fixed) method". In the site agreement "fixed method" was selected and the impugned term was inserted, under the heading "Other".
2. As required by the regulation, the site agreement includes, following the impugned term, the line:

1. The site agreement also provided that the first site fee increase would be on 28 November 2020 and that the fixed method would apply for "the duration of your occupancy".

Other proceedings relating to similar site agreements in the Village

1. Proceedings challenging site agreements including the impugned term (or an almost identical term) were commenced by 52 other home owners at the Village in 2019.
2. On 3 September 2020 a Senior Member of the Tribunal found that the impugned term was not consistent with s 66(2) of the RLLC Act as in force in 2020. Section 66 then provided:

66 Increase of site fees by fixed method

(1) This section applies to a site agreement that provides for the increase of the site fees by a fixed method.

(2) A site agreement must not provide that the site fees may be increased by more than one fixed method. If more than one method is specified, the method that results in the lower or lowest increase of site fees is the applicable method.

(3) The operator must not increase (or attempt to increase) the site fees that are to be increased according to a fixed method otherwise than in accordance with that method and this section.

Maximum penalty - 50 penalty units.

(4) The operator must give at least 14 days' written notice to the home owner of any increase in site fees, even if the timing of the increase is specified in the site agreement.

(5) The notice must -

(a) specify the amount of the increased site fees, and

(b) specify how the increased site fees have been calculated, and

(c) specify the day on and from which the increased site fees are payable, and

(d) include such other information as may be prescribed by the regulations, and

(e) be in the approved form (if any).

(6) The home owner is not required to pay any increase in the site fees until notice of the increase is given as required by this section.

(7) The terms of a site agreement fixing the method of future increases of site fees cannot be challenged under this Act. However -

(a) the terms of the agreement may be varied if the parties enter into a written agreement to do so, and

(b) this subsection does not affect any right that the home owner has, apart from this Act and the Civil and Administrative Tribunal Act 2013, to challenge any of the terms.

Note -

A home owner may be able to take action over unfair contract terms under the Australian Consumer Law of the Commonwealth.

(a) be for a specified period or for the duration of occupancy of a residential site by a home owner, and

(b) have effect for longer than the term of a site agreement for a fixed term.

1. The Tribunal held that, by increasing site fees by reference to a number of variables, "each of [which] would on its own comprise a fixed method", the site agreements provided for fee increases by more than one fixed method.
2. The applicants in those proceedings also alleged that the impugned term was an unfair contract term within the meaning of s 23 of the ACL.
3. Section 23 of the ACL relevantly provides:

23 Unfair terms of consumer contracts and small business contracts

(1) A term of a consumer contract or small business contract is void if:

(a) the term is unfair; and

(b) the contract is a standard form contract.

(2) The contract continues to bind the parties if it is capable of operating without the unfair term.

...

(3) A consumer contract is a contract for:

(a) a supply of goods or services; or

(b) a sale or grant of an interest in land;

to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.

1. Section 27 of the ACL governs whether a contract is a standard form contract. As in force in 2020, it provided:

27 Standard form contracts

(1) If a party to a proceeding alleges that a contract is a standard form contract, it is presumed to be a standard form contract unless another party to the proceeding proves otherwise.

(2) In determining whether a contract is a standard form contract, a court may take into account such matters as it thinks relevant, but must take into account the following:

(a) whether one of the parties has all or most of the bargaining power relating to the transaction;

(b) whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties;

(c) whether another party was, in effect, required either to accept or reject the terms of the contract (other than the terms referred to in section 26(1)) in the form in which they were presented;

(d) whether another party was given an effective opportunity to negotiate the terms of the contract that were not the terms referred to in section 26(1);

(e) whether the terms of the contract (other than the terms referred to in section 26(1)) take into account the specific characteristics of another party or the particular transaction;

(f) any other matter prescribed by the regulations.

1. The Tribunal accepted evidence from the respondent (also the respondent to those proceedings) that the respondent "affords an opportunity for negotiation in respect of the agreements" and that negotiations had resulted on occasions in amendment to the terms of the agreement. On that basis the Tribunal concluded that the contract was not a standard form contract as that term is defined in the ACL.
2. The Tribunal nevertheless stated that, if it had held the agreement to be a standard form contract, it would have found the impugned term to be an unfair contract term.
3. The respondent appealed against that decision to the Appeal Panel of the Tribunal and, on 14 September 2021, the Appeal Panel upheld the appeal on the basis that the impugned term involved only one fixed method for the calculation of fee increases: Kincumber Nautical Village Pty Ltd v Morris & Ors [2021] NSWCATAP 275.
4. The Appeal Panel held, at [41]:

"[T]he fact that the site fee increase clause in the site agreements the subject of these proceedings contains a number of components or integers is irrelevant, so long as the calculation is 'fixed', that is, is definitely ascertainable. The clause in question provides a calculation from which the site fee increase in any given year can be calculated or ascertained definitely and is 'a fixed calculation' and therefore 'a fixed method' for increasing site fees."

1. The Appeal Panel noted, at [45], that, although there had been "some discussion during the hearing of the appeal of the Tribunal's view on whether the site fee increase term is an unfair term under the ACL", that issue did not arise on the appeal. The applicants in those proceedings had not filed any cross appeal or document in the nature of a notice of contention seeking to maintain the Tribunal's decision at first instance on the basis that it was wrong to conclude that the site agreements were not standard form contracts.
2. The Appeal Panel's decision was upheld by Garling J in the Supreme Court on further appeal: Rowe v Kincumber Nautical Village Pty Ltd [2022] NSWSC 1378 (Rowe No 1); Rowe v Kincumber Nautical Village Pty Ltd (No.3) [2022] NSWSC 1701.
3. The applicant in these proceedings was not a party to the earlier proceedings and is not bound by any finding in those proceedings, although Mr Hochroth of counsel, who appeared for the respondent, submitted that the decision at first instance was authority for the proposition that the site agreement was not a standard form contract.

1. The hearing of the application took place in Gosford on 17 September 2024. Mr Batley, of counsel, appeared for the applicant. Mr Hochroth, of counsel, appeared for the respondent.
2. The applicant's evidence in chief consisted of a statutory declaration of the applicant made on 8 May 2024, including annexures MA-1 to MA-9, which became exhibit A, and a bundle of documents including a copy of the residential site agreement of one other resident of the Village and the pages incorporating the term governing site fee increases from the residential site agreements for six other sites in the Village. That bundle became exhibit B.
3. The applicant also provided a chronology.
4. The respondent's evidence in chief consisted of:

(1) An affidavit affirmed by Kelly Mona Langker-Ferguson on 31 March 2024 with annexure KLF-1, which was marked Exhibit 1

(2) An affidavit affirmed by Theodore Powers Whitmont on 19 June 2024, including annexures TPW-1 to TPW-6, which was marked Exhibit 2.

(3) An affidavit of Emily Anne Brownlee sworn on 11 September 2024 with annexures EAB-1 and EAB-2, which was marked Exhibit 3.

(4) A letter dated 29 November 2018 from the respondent to Mr James Moore, a resident of the Village, which became Exhibit 4. This letter was produced by Ms Langker-Ferguson in the course of her oral evidence in chief.

1. The applicant sought to tender, as evidence in reply, three statutory declarations from residents of other residential land lease communities in New South Wales. The tender of those documents was objected to, and they were not admitted into evidence. They were marked for identification, MFI C, D and E. An affidavit from the applicant's solicitor, Mr Paul Francis Smyth affirmed on 12 September 2024, including annexures PFS-1 to PFS-11 was also tendered in reply, and became exhibit F.
2. Each of the applicant and Ms Langker-Ferguson gave oral evidence and was cross-examined.
3. Mr Whitmont, who was a director and secretary of the respondent, had passed away suddenly on 4 July 2024. Although his affidavit was received in evidence, the fact that Mr Whitmont was not available for cross examination affects the weight to be accorded to it.
4. Annexure TPW-3 to Mr Whitmont's affidavit was a letter dated 18 June 2024 from Mr Martin Booth, a partner of Pitcher Partners, a firm of accountants, to which was attached a "Statement by Expert" dated 12 February 2020 signed by Mr David Staples, also a partner of Pitcher Partners. Mr Staples' statement did not refer to the Tribunal's Procedural Guideline 3 regarding expert evidence. The conclusion expressed in the last paragraph of Mr Staples' statement was:

"7. I have reviewed the Fixed Calculation Method by which KNV calculates site fee increases. In my professional opinion, the method is appropriate having regard to the long-term nature of its' relationships with Home Owners, and of the nature of the industry including legislative restraints and is reasonably necessary to protect the interest of KNV."

1. Mr Booth in his letter stated that Mr Staples was now retired and that he agreed with the contents of the letter, including the conclusion in paragraph 7. Mr Booth stated:

"[T]he site fee increase term remains reasonably necessary as at today."

1. Neither Mr Staples nor Mr Booth was made available for cross examination. Mr Booth's letter and Mr Staples' statement were admitted in evidence, although the fact that neither was available for cross examination affects the weight that may be attached to them.

1. The applicant's evidence described the circumstances in which he came to purchase his home and execute the site agreement. He stated that he was provided with a disclosure statement in November 2019, after he had negotiated the purchase of the home situated on the site and completed a form seeking approval from the respondent. The applicant stated that on 3 January 2020 he was handed a document containing the terms of the site agreement pre-signed by Ms Langker-Ferguson, which he executed in front of Ms Langker-Ferguson. The site fees specified in the agreement were $242 per week.
2. The applicant stated that he was not told that there was any ability or opportunity for him to negotiate any of the terms of the site agreement, in particular the method for site fee increases.
3. On 3 January 2023 the applicant and Ms Langker-Ferguson also executed a document headed "Temporary Reduction of Site Fees by Mutual Agreement - 12 Month Agreement". That document stated that the respondent agreed to reduce site fees for the property the applicant had agreed to lease to $229.25 per week until 11 March 2020.
4. The applicant asserted that he had not been informed of the proceedings in the Tribunal brought by other site owners, which had been on foot at that time. The applicant also stated that he had received some financial advice but no legal advice in relation to the site agreement before entering into it.
5. The applicant stated that the date on which the site fees would first be increased was amended by hand from 11 March 2020 to 28 November 2020 on 28 November 2020. The applicant stated that the alteration had been initialled by himself and Ms Langker-Ferguson at that time.
6. The applicant attached, as annexure MA-7, four letters from the respondent, signed by Mr Whitmont, each of which extended the "temporary reduction" of site fees: to 27 May 2020, to 10 June 2020, to 4 November 2020 and to 27 January 2021.
7. The applicant stated that, on 15 November 2023, he received a notice of site fee increase advising that his new site fee would be $296 per week. The notice, part of annexure MA-8, stated that the increase had been calculated by reference to the change in the CPI Sydney All Groups since November 2018, plus 3.75%, rounded up to the nearest dollar. The applicant stated that he received notice on 18 November 2023 that the previous notice of site fee increase was withdrawn and that his new site fee would be $268 per week from 7 December 2023. That notice, also part of annexure MA-8, stated that the new site fee had been calculated:

"[B]y applying to the current site fee, the change in the CPI Sydney All Groups in the way provided in the agreement between us. CPI increased by 6.6%. To the CPI increase was added 3.75%. The resultant sum has been rounded up to the nearest dollar."

1. The applicant stated that thereafter he had made enquiries and sought advice. On 20 February 2024, Mr Smyth, the applicant's solicitor from the Tenants Union NSW Co-op Ltd, sent a letter on the applicant's behalf to the respondent seeking a refund of all extra site fees paid by the applicant since the increase took effect on 7 December 2023. The letter asserted that the site fee increase term, that is the impugned term, is void because it is an unfair term within the meaning of s 23 of the ACL.
2. In cross-examination, the applicant accepted that the impugned term had been set out in the disclosure statement which he had received in November 2019, together with some worked examples. The applicant stated that he had run the disclosure statement, including the impugned term, past his financial advisor who had stated that it was very confusing but had nevertheless recommended that he enter into the site agreement. The applicant's evidence was that the financial advisor had said that he was going to have to pay wherever he went and, given his financial circumstances at that time, he should "go for it".
3. The applicant asserted that he did ask Ms Langker-Ferguson if there was any possibility of movement in the size of the site fee but, when challenged on that evidence, appeared to accept that that might have occurred in an earlier discussion with Ms Langker-Ferguson. The applicant also appeared to accept that he was not under any pressure to sign the site agreement on 3 January 2020.

1. Ms Langker-Ferguson's evidence was that she is the manager of the Village and is based on-site. Ms Langker-Ferguson stated that she was responsible for preparing site agreements for the Village and that her practice was to use a template provided by the Industry Association and fill it in with terms specific to each homeowner. She stated that she would apply her "DocuSign" (ie electronic) signature to the site agreement at the time she printed out the site agreement so that there was an automatically generated electronic record of the issue of site agreements and, because site agreements were printed on green paper, she was not delayed, during an appointment for the execution of a site agreement by a prospective purchaser, by the need to change paper in her printer.
2. Ms Langker-Ferguson suggested that the handwritten change to the date of the first increase in site fees was made at the meeting on 3 January 2020, when the applicant executed the agreement. I note this evidence conflicts with that given by the applicant and that the applicant was not cross-examined on the discrepancy, nor was Ms Langker-Ferguson. Neither party appeared to place any significance upon the date of the change.
3. Ms Langker-Ferguson gave evidence that:

"10 If a prospective homeowner wishes to negotiate a term in their site agreement, either before, during or after their site agreement appointment, I ask them to put their request in writing. My role is to then pass along that request to the village operator, who considers all such requests and is responsible for approving or rejecting them. I am then responsible for communicating the operator's response to the prospective homeowner and, where applicable, amending their site agreement to reflect any re-negotiated terms."

1. Ms Langker-Ferguson gave, as an example of that process, an instance in May 2024, when a prospective homeowner indicated that they had already lived in a residential community, and knew how they worked and that he was concerned that his proposed fees were "slightly too high". Ms Langker-Ferguson stated that she asked that prospective homeowner to put his request in writing and that the Village operator had agreed to offer a lower starting site fee.
2. Ms Langker-Ferguson stated:

"12 If Mr Anderson had sought to negotiate any terms in his site agreement, I would have taken the same approach and asked him to put his request in writing, and then passed it along to the village operator for approval.

13 In the about 12 years that I have worked at Kincumber, I have never experienced a time when the village operator was not willing to consider or discuss an amendment to a site agreement."

1. Ms Langker-Ferguson gave evidence of her practice in relation to the execution of site agreements which she stated was by appointment at the Village. She stated that she tells prospective homeowners to take as much time as they need to go through the site agreement and to ask any questions they have.
2. Specifically in relation to the applicant, Ms Langker-Ferguson gave evidence of having issued the disclosure statement on 19 November 2019 and having received a call from the applicant on that date, in respect of which she had made a note, which recorded:

"Michael rang -

question jump in fees re: current and proposed. Explained Market rent

Discussed increase due

He has put on hold for now."

1. Ms Langker-Ferguson stated that she recalled the applicant attending her office for the site agreement meeting but that she did not recall every detail of the meeting. She stated that she did recall that there was nothing unusual or odd about the meeting and that the applicant had mentioned a back injury.
2. At the commencement of her oral evidence Ms Langker-Ferguson produced the document which became Exhibit 4 which, as noted above, was a letter dated 29 November 2018 to a different resident of the village, Mr James Moore, by which the respondent agreed to "temporarily" reduce any rent increase for the first five years of Mr Moore's tenancy such that the rent payable will increase by no more than $10 each year for those five years. The letter stated that, after those five years, "the rent will increase to the compounded amount calculated over time".
3. Ms Langker-Ferguson stated that she had overlooked that letter in preparing her evidence for these proceedings in May 2024.
4. In cross examination, Ms Langker-Ferguson indicated that, within the Village, there are about 160 homeowners whose site agreements provide for fee increases by the notice method, and about 200 homeowners who have site agreements incorporating the fixed method for fee increases. Ms Langker-Ferguson indicated that the homeowners with fee increases determined by the fixed method paid a weekly fee about $20 higher at that time.
5. Ms Langker-Ferguson indicated that, during her 12 years at the Village, she was not aware of any instances where a person had sought to negotiate for fee increases to be by the notice method rather than the fixed method.
6. Ms Langker-Ferguson also acknowledged that her involvement in the financial affairs of the Village was limited to arranging the execution of site agreements and obtaining a direct debit authorisation for the payment of site fees. She had no knowledge of the revenues or expenditures involved in the operation of the Village.

1. Ms Brownlee is a solicitor employed by the respondent's solicitors. Her evidence merely dealt with the identity of the directors of the respondent since Mr Whitmont's passing. That evidence was that, until Mr Theo Whitmont's death, the only two directors of the respondent had been Mr Theo Whitmont and his father Norton Whitmont. Mr Norton Whitmont was 87 years old and had not personally been involved in day-to-day management or negotiations with homeowners in relation to site agreements for many years. Since Theo Whitmont's death, he has been replaced as director and secretary of the respondent by Mr Mark Schneider, who lives overseas and has had no historical involvement in managing the affairs of the respondent. Ms Brownlee was not required for cross examination.

1. As noted above, Mr Smyth is the applicant's solicitor. Mr Smyth's affidavit annexed correspondence relating to the filing of evidence and other procedural issues. Relevantly to the matters to be determined at the hearing, Mr Smyth gave evidence of communications with the respondent's solicitors relating to the question whether the respondent intended to lead further evidence in substitution for the evidence given by Mr Theo Whitmont, on which he was no longer able to be cross-examined. That correspondence included confirmation that the applicant would object to the respondent's reliance upon Mr Whitmont's affidavit. Mr Smyth was not required for cross examination.

1. As noted, despite the fact that Mr Whitmont was not available for cross examination, his affidavit was received in evidence, subject to weight.
2. Relevantly, Mr Whitmont's evidence was:

"11 It is not uncommon for a site agreement to remain in place for upwards of 15 years."

"12 It is also not uncommon that homeowners may wish to negotiate the terms of their site agreement, either before or after entry into the agreement."

If a homeowner wished to negotiate a term of their agreement, they would be asked to put their request in writing so it could be passed to Mr Whitmont. Mr Whitmont would instruct Ms Langker-Ferguson to either accept, reject or counter the proposal and a written response would be provided to the homeowner, "so that there is a record of the negotiation, and any agreement reached, between the parties."

"14 I am aware of, or have personally been involved in, the negotiation of numerous site agreements at the community. This includes many instances where terms in a site agreement have been negotiated and ultimately changed - such as terms providing for a reduction in the site fee amount, a change in the duration of a term, and additional terms concerning repair works".

1. Mr Whitmont provided "by way of example" two documents which Mr Whitmont asserted evidenced the respondent negotiating the terms of a site agreement with a prospective homeowner.
2. The first was a letter dated 18 September 2020, apparently responding to a request that the duration of the fixed method of fee increase be reduced from 10 years to 5 years, by counter-offering to reduce the term to 7 years. Although the signature on the letter has been redacted, it is apparent that the counter-offer was accepted.
3. The second document is an extract of a site agreement entered into in February 2020 which includes an additional term concerning repairs and refurbishments to the dwelling on the site the subject of the site agreement.
4. I note immediately that if, as Mr Whitmont suggested, all requests for negotiation of site agreements were recorded in writing, this is a signally limited collection of examples. I infer that, apart from the document constituting Exhibit 4 (which Ms Langker-Ferguson acknowledged she had previously overlooked), these are the only examples of occasions when prospective homeowners had sought, successfully or otherwise, to negotiate changes to the site agreement presented by the respondent.
5. Mr Whitmont stated in respect of the impugned term:

"20 Kincumber designed this formula to align site fee increases in the community with actual operating cost increases, while also ensuring it is robust enough to future proof its business."

1. Mr Whitmont asserted that he held the same belief as expressed by Mr Booth, that is that the impugned term is "reasonably necessary to protect the interest" of the respondent. He stated that Pitcher Partners had been the respondent's tax agent and accountant for more than 20 years.
2. Mr Whitmont stated that he had inspected the accounting records of the respondent and that, based on that review, he estimated that the operating expenses attributable to the categories of expense "identified in the third integer" of the impugned term (electricity, water, gas et cetera) comprise only around 30% of the respondent's overall operating expenses "excluding the costs of capital and depreciation". Mr Whitmont identified a number of categories of operating costs not included in the third integer, including:
   • advertising and promotion;
   • accounting and administration costs;
   • security,
   • waste disposal;
   • repair, maintenance and upgrade works;
   • plant and equipment; and
   • salaries and superannuation contributions.
3. Mr Whitmont described the second integer, 3.75%, as a "buffer" to ensure the impugned term is "sufficiently robust" to provide the respondent with "a sustainable stream of revenue at the community" to cover:

"a. increases in operating costs not captured by the third and fourth integers [ie increases in the specific identified operating costs and changes in GST] ...;

b. depreciation;

c. planned capital works; and

d. unforeseen operating costs."

1. Mr Whitmont also suggested that, if the respondent were to alter its operating practices and use debt to fund its operating expenses, the second integer would also need to cover the costs of that debt capital.
2. Mr Whitmont stated that the respondent anticipated carrying out upgrades to the road and plumbing networks in the community in coming years and that, based on his previous experience, he estimated those works would cost at least $3 million. In respect of unforeseen operating costs, Mr Whitmont suggested that the installation of solar panels would require upgrade works to distribution boxes and communications capacity and that the respondent would need to replace the electricity cables in order to ensure smart electricity metres could be installed at the Village.
3. Mr Whitmont did not seek to provide any explanation of why the first integer, that is increases by reference to increases in the consumer price index, was also necessary in addition to the other three integers.
4. Mr Whitmont also gave evidence in relation to the site fees charged to the applicant from the commencement of his site agreement in January 2020. Mr Whitmont stated that the applicant's site fees were maintained at $229.25 per week until 15 December 2022, when they were increased to the amount stated in the site agreement, that is $242 per week. Mr Whitmont confirmed that the initial letter sent to the applicant on 15 November 2023 incorporated a miscalculation of the intended increase and that the applicant had only been charged the "correct amount" pursuant to the letter issued on 18 November 2023, that is $268 per week, which was what the applicant had been paying up to the time that Mr Whitmont made his affidavit.
5. Mr Whitmont explained that the reason for the offer to residents at the Village of "temporary site fee reductions" was:

"a. to maintain a level of consistency in the site fee increases payable by homeowners across the community; and

b. due to the Covid 19 pandemic to assist in keeping site fees low."

1. Mr Whitmont suggested that the site fee reductions were a consequence of the outcome of proceedings brought in 2017 by homeowners with site agreements which utilised the "notice method" of increase, which had been resolved by consent with increases in site fees of $10 in 2017, $9.50 in 2018 and $9.25 in 2019. Mr Whitmont suggested that, as a gesture of goodwill, the respondent offered homeowners on the fixed method temporary site fee reductions, so that their site fees would not increase by more than the increases consented to in the "By Notice" proceedings.

The evidence from Messrs Staples and Booth of Pitcher Partners

1. I have set out above, at [28], paragraph 7, the final conclusion, to Mr Staples' "Statement by Expert". The balance of that document was as follows:

"1. I have been responsible for the preparation of all formal and statutory reporting for KNV [the respondent] and its business operations for more than 20 years.

2. It is my experience, in relation to KNV, and all other commercial enterprises with which I am involved that the Consumer Price Index (CPI) does not reflect the changing costs of operating a business and is an inadequate measure on which to base business forecasts or budgets.

3. The CPI does not meet the commercial needs of KNV even in the short term; it does not reflect economic shocks, the requirement of KNV to meet exigencies, maintenance projects, and the impacts of Government policy on a its industry.

4. I am firmly of the view that any business that consistently adjusted its prices based only on the CPI would ultimately fail.

5. To survive, a business needs to recognise the risks inherent in the environment in which it operates and establish prices that account for those risks. For a business to survive, it must cover the cost of all exigencies whether foreseeable or not.

6. Managers of enterprises have the responsibility of recovering all costs, including the cost of maintaining the capital of the business in real terms."

1. It is convenient to set out the statutory provisions relevant to the determination of these proceedings which have not already been extracted above.
2. Section 65 of the RLLC Act as in force in 2020 provided:

65 How site fees may be increased

(1) Site fees payable under a site agreement can be increased only if the increase is made in accordance with this Division.

(2) A site agreement may provide that site fees payable under it may be increased in accordance with either of the following procedures -

(a) at specified intervals (or on specified dates) by a fixed method, which may be either -

(i) by fixed amounts, or

(ii) by a fixed calculation that does not use more than 1 element to calculate the increase,

Examples -

• the increase is calculated using Consumer Price Index rates

• the increase is calculated using the variation in the age pension

(b) by notice (otherwise than by a fixed method).

68 Refund of overpaid site fees if increase not compliant

(1) A home owner under a site agreement may apply to the Tribunal for an order directing the refund of overpaid site fees on the ground that the increase of site fees did not comply with a requirement of this Division.

(2) The Tribunal may make any of the following orders -

(a) an order directing a refund to the home owner,

(b) an order directing a refund to any other home owner in the community who the Tribunal becomes aware also had a non-compliant increase of substantially the same kind,

(c) any ancillary order that the Tribunal, in the circumstances, thinks appropriate.

(3) An application under this section must be lodged no later than 12 months after notice of the increase was given to the home owner.

24 Meaning of unfair

(1) A term of a consumer contract or small business contract is unfair if:

(a) it would cause a significant imbalance in the parties' rights and obligations arising under the contract; and

(b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and

(c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

(2) In determining whether a term of a contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following:

(a) the extent to which the term is transparent;

(b) the contract as a whole.

(a) expressed in reasonably plain language; and

(b) legible; and

(c) presented clearly; and

(d) readily available to any party affected by the term.

(4) For the purposes of subsection (1)(b), a term of a contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.

25 Examples of unfair terms

Without limiting section 24, the following are examples of the kinds of terms of a consumer contract or small business contract that may be unfair:

(a) a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract;

(b) a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract;

(c) a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract;

(d) a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract;

(e) a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract;

(f) a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract;

(g) a term that permits, or has the effect of permitting, one party unilaterally to vary the characteristics of the goods or services to be supplied, or the interest in land to be sold or granted, under the contract;

(h) a term that permits, or has the effect of permitting, one party unilaterally to determine whether the contract has been breached or to interpret its meaning;

(i) a term that limits, or has the effect of limiting, one party's vicarious liability for its agents;

(j) a term that permits, or has the effect of permitting, one party to assign the contract to the detriment of another party without that other party's consent;

(k) a term that limits, or has the effect of limiting, one party's right to sue another party;

(l) a term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract;

(m) a term that imposes, or has the effect of imposing, the evidential burden on one party in proceedings relating to the contract;

(n) a term of a kind, or a term that has an effect of a kind, prescribed by the regulations.

26 Terms that define main subject matter of consumer contracts or small business contracts etc. are unaffected

(1) Section 23 does not apply to a term of a consumer contract or small business contract to the extent, but only to the extent, that the term:

(a) defines the main subject matter of the contract; or

(b) sets the upfront price payable under the contract; or

(c) is a term required, or expressly permitted, by a law of the Commonwealth, a State or a Territory.

(2) The upfront price payable under a contract is the consideration that:

(a) is provided, or is to be provided, for the supply, sale or grant under the contract; and

(b) is disclosed at or before the time the contract is entered into;

but does not include any other consideration that is contingent on the occurrence or non‑occurrence of a particular event.

1. Section 66 of the RLLC Act, as in force in 2020, is extracted at [9] above. The relevant parts of ss 23 and 27 of the ACL are set out at [12] and [13] above.

1. It was not disputed by the respondent that the site agreement was a consumer contract as defined in s 23(3) of the ACL.
2. The issues which the parties have raised and which I am required to determine are:

(1) Is the contract a standard form contract?

(2) If so, is the impugned term an unfair contract term? This issue raises three sub-issues:

(a) Whether the term would cause a significant imbalance in the parties' rights and obligations arising under the contract;

(b) Whether the term was not reasonably necessary in order to protect the legitimate interests of the respondent, in respect of which issue the onus of proof falls on the respondent;

(c) Whether the term would cause detriment to the applicant. It was not in dispute that the term, if valid, would cause detriment to the applicant.

(3) Whether the application of s 23 of the ACL to the impugned term is excluded by s 26(1)(b) of the ACL, that is whether the impugned term sets the "upfront price" payable under the site agreement.

(4) If the impugned term is an unfair contract term, what orders should the Tribunal make?

1. The applicant relied upon a written outlines of submissions filed on 10 May 2024. The respondent relied on written submissions filed on 21 June 2024. Additionally, both parties' representatives made oral submissions at the hearing.
2. It is convenient to deal with each issue in turn.

1. Pursuant to s 27(1) of the ACL, the site agreement is presumed to be a standard form contract.

1. The respondent submitted that the site agreement was not a standard form contract for a number of reasons.
2. First, in respect of s 27(2)(a), the respondent submitted that it does not have or did not have "all or most of the bargaining power" relating to the transaction.
3. The respondent referred to "numerous provisions" in the RLLC Act "designed to protect the interests of homeowners and ensure operators do not have unfair bargaining power when entering into a site agreement." The specific provisions referred to by the respondent were:
   • Section 12, which prohibits contracting out;
   • Section 23, which provides a 14 day cooling off period;
   • Section 28, which prohibits additional terms inconsistent with the terms prescribed in the standard form;
   • Section 29, which provides for regulations to identify prohibited terms; and
   • Section 109, which provides that an operator may not unreasonably delay or refuse to enter into a site agreement and provides that the site fees under a new site agreement must not exceed "fair market value".
4. I note that "fair market value" in respect of the site fees payable under a new site agreement is defined in s 109 (6) as the greater of the site fees paid by the current owner and "the site fees currently payable for residential sites of a similar size and location within the community".
5. The respondent submitted:

"5.5 These provisions provide powerful constraints on the bargaining position that an operator can adopt in relation to the terms of a site agreement. Regardless of market conditions, an operator is not able to present terms to a prospective home owner on a "take it or leave it" basis. Negotiation must take place against the backdrop of the regime set by the RLLC Act. Consistent with that, the evidence is that the respondent did not in this case, nor is its practice to, present terms to the home owner on the basis that they could not be negotiated. Rather, the respondent made every effort to ensure that the applicant had sufficient time to read, consider, understand and accept the terms of the site agreement, including the site fee increase term."

1. Secondly, the respondent accepted that it had entered into multiple site agreements in the village on substantially similar terms, but submitted:

"This does not, however, reflect the degree to which the material terms of the site agreement could be negotiated as between the parties. Rather, it reflects that the majority of the terms of the site agreement are required by the Regulations. The respondent, when requested to amend or negotiate terms by someone in the applicant's position, has been open and willing to do so."

1. I note that the respondent's submissions referred to s 27(2)(ba) of the ACL in this context. That provision was not included in the ACL in 2020 when the applicant's site agreement was entered into, but I consider that, independently of that provision, the fact that the respondent had entered into around 200 site agreements incorporating similar terms providing for the increase of site fees, is a relevant factor which may be taken into account in determining whether the site agreement is a standard form agreement.
2. Thirdly, in respect of s 27(2)(b), the respondent submitted that the site agreement was not prepared by the respondent prior to any discussion relating to the transaction. The respondent referred to Ms Langker-Ferguson's evidence that, in accordance with her usual practice, she had only filled out the applicant's details and the initial site fee and printed out the site agreement after the applicant indicated that he wished to enter into a site agreement on the terms indicated in the disclosure statement.
3. Fourthly, in respect of s 27(2)(c), the respondent submitted that the applicant was not, in effect, required either to accept or reject the terms of the site agreement in the form in which they were presented to him. The respondent submitted:

"Rather, the applicant was provided with ample opportunity to negotiate or seek to vary the terms of his site agreement (including during the 6 weeks between receipt of the disclosure statement and entry into the site agreement and during the applicant's appointment to review and sign his site agreement)."

1. Fifthly, the respondent submitted that the applicant was given an effective opportunity to negotiate the terms of the site agreement. The respondent pointed to the fact that the site agreement itself stated that the impugned term was negotiable. The respondent submitted that:

"The respondent's usual practice is to negotiate over the terms of a site agreement if a prospective home owner wishes to do so."

1. The respondent further submitted that the applicant had taken no step to indicate that he wished to negotiate the impugned term and had entered into the site agreement after taking independent advice from his financial advisor.
2. The respondent relied upon the finding of the Tribunal at first instance in the earlier proceedings:

"27 I accept that the Operator's evidence that it affords an opportunity for negotiation in respect of the agreements, The agreements themselves state that the site fee increase provisions are negotiable. The Operator produced evidence of occasions on which negotiations had resulted in amendment to the terms of the agreement. In practice residents may have felt unable to negotiate but I am not satisfied that this makes the agreements standard form agreements.

28 I am therefore not satisfied that provisions of the ACL in respect of unfair contract terms apply to the subject agreements."

"It was entirely correct of the Tribunal to place weight on the statement in the site agreement that the site fee increase provisions are negotiable; the evidence suggests that (in the case of the respondent) that was a true and accurate statement."

1. Sixthly, in respect of s 27(2)(e), the respondent submitted that the terms of the contract take into account the specific characteristics of the transaction. The respondent suggested, without identifying any evidence to that effect, that the initial site fees of $242 a week, fixed by the site agreement, were referable to the specific characteristics of the size and location of the site. The respondent submitted that the site agreement does not otherwise take into account specific characteristics of the applicant, but only because the applicant did not seek to negotiate the terms of the site agreement at the time it was made. The respondent pointed to evidence that the applicant had sought approval to perform works to improve access at his site for his motorbikes, which had been agreed to by the respondent.

1. The applicant's written submissions emphasised that the onus of establishing that the site agreement was not a standard form contract lay upon the respondent. The applicant submitted that the applicant's site agreement had the following "hallmarks of a standard form contract":

"35.1. the operator had all or most of the bargaining power relating to the transaction (Mr Anderson as the purchaser of a home at KNV had limited ability to negotiate any terms of the site agreement);

35.2. the contract was prepared by the operator before there was any discussion about the transaction between parties;

35.3. Mr Anderson was in effect required either to accept or reject the terms of the contract in the form in which they were presented;

35.4. Mr Anderson was not given an effective opportunity to negotiate the terms of the contract;

35.5. terms of the contract do not take into account the specific characteristics of Mr Anderson."

1. The applicant submitted that the Tribunal should not follow the finding of the Tribunal in the earlier proceedings.

1. I consider that the applicant's site agreement is a standard form contract.
2. I am not persuaded that the applicant had any bargaining power in respect of the site agreement. If the applicant wished to acquire the home within the Village which he had agreed to purchase, he was required to enter into a site agreement with the respondent. The requirements of the RLLC Act did not impose any substantial constraint upon the respondent's capacity to require prospective site owners to accept the impugned term, as the outcome of the earlier litigation demonstrated.
3. It is clear, in my view, that the site agreement was prepared by the respondent before there was any discussion about the transaction between the parties. The fact, that Ms Langker-Ferguson printed off a site agreement in the usual terms (differing from other site agreements only in the particulars specific to the applicant and the initial site fee) only after the applicant had made an appointment to come and execute the agreement, does not overcome the clear evidence that the impugned term was incorporated into the draft agreement well before the applicant engaged in any discussions with the respondent.
4. "Prepare" in this context does not mean inserting a counter-party's details and printing out a copy.
5. I am not satisfied that the applicant had any real capacity or opportunity to negotiate the terms of the site agreement, in particular the impugned term. I draw the inference, from the absence of evidence of any instance where a prospective site owner had negotiated a variation of the impugned term, as opposed to a short term reduction in site fees or suspension of the operation of the impugned term, that the respondent was not open to negotiating in respect of the impugned term. The fact that, as required by the regulations, the site agreement presented to the applicant for signature included a note, following the impugned term, that "the methods listed above are negotiable", does not negate or override that inference.
6. As noted above Mr Whitmont's evidence was that all requests for negotiation were recorded in writing. The fact that the respondent was only able to produce two examples of even the most inconsequential variation of the terms relating to increases in site fees clearly indicates that the respondent was not open to negotiation in respect of the impugned term.
7. The conclusion of the Tribunal in the earlier proceedings that the respondent did offer an opportunity for negotiation was founded upon the evidence before the Tribunal in those proceedings. The Tribunal recorded that the respondent had produced evidence of occasions on which negotiations had resulted in amendment to the terms of the agreement. I was not informed whether all of the evidence which had been before the Tribunal on the previous occasion (on the basis of which the Tribunal had reached the conclusion that there had been examples of negotiations resulting in amendment to the site agreement) was included in the evidence before me.
8. However, regardless of whether I have the same evidence before me, I am not bound to follow the Tribunal's earlier decision, and in my view, if that decision were founded upon the same evidence as was placed before me, it is plainly wrong.
9. The proposition in the earlier decision (in the last sentence of [27]) that the possibility, that "in practice residents may have felt unable to negotiate", did not make the agreements standard form agreements, fails, in my view, to acknowledge that the onus of establishing that an agreement is not a standard form agreement falls upon the respondent, and, moreover, elevates form over substance.
10. I accept that the applicant was, in effect, required either to accept or reject the terms of the contract in the form in which they were presented. Ms Langker-Ferguson's suggestion that, if the applicant had sought a variation to those terms, she would have passed that request to Mr Whitmont carries no weight in the determination of the question what would have happened if the applicant had done so.
11. Mr Whitmont's untested evidence, that he would consider any request for variation of the terms of the agreement, likewise does not carry any weight in circumstances where Mr Whitmont, despite referring to "many instances where terms in a site agreement have been negotiated and ultimately changed", produced only one example of an agreement where the impugned term was varied and then only by the shortening of the term during which the impugned term would operate from ten years to seven years.
12. The suggestion that the site agreement in any way takes into account characteristics specific to the applicant does not warrant serious consideration. I do note, however, that the only respect suggested by the respondent in its submissions was the initial site fee, which, whatever might be the case in respect of the provisions for the variation of the site fee, clearly constituted "the upfront price payable under the contract" (ie, a term referred to in s 26(1)) and accordingly was excluded from consideration under s 27(2)(e).

(a) Significant imbalance in the parties' rights and obligations

1. The onus on this issue lies upon the applicant.
2. The applicant submitted:

"44. Mr Anderson has no rights under the site fee increase term. The operator has all the rights.

45. It is significant that the operator is in control of decisions about its expenditure and any increases in its costs of electricity, insurance, and communication. It is already comfortably cushioned against increases in costs by the provision for a fixed amount increase of 3.75% plus any increase in the CPI. On the other hand, it is reasonable to assume that residents of KNV, including Mr Anderson, have relatively limited capacity to absorb price increases because they rely on fixed income in the form of pensions or superannuation benefits.

46. Mr Anderson's financial capacity to absorb an increase is not relevant to the question of imbalance. The High Court confirmed in Karpik [Karpik v Carnival plc [2023] HCA 39; 98 ALJR 45 at [54]]:

"The relevant inquiry in s 24(1)(a) is whether the term "would cause a significant imbalance in the parties' rights and obligations arising under the contract" (being a standard form contract), not whether a particular party is personally able to cope with such an imbalance."

1. The respondent submitted that the applicant's submissions in this regard were limited to two arguments:
2. In response to the submission that the respondent is in control of decisions about its expenditure and increases in its cost of electricity, insurance and communications, the respondent submitted that a similar argument had been rejected by the Supreme Court in Rowe No 1 at [48]-[49].
3. In response to the submission that it is reasonable to assume that residents of the village, including the applicant, have "relatively limited capacity to absorb price increases", the respondent submitted that the applicant had conceded in par 46 of his submissions that that was irrelevant to the question of imbalance.
4. The respondent cited Dialogue Consulting Pty Ltd v Instagram, Inc (2020) 291 FCR 155; [2020] FCA 1846 at [344]:

"[344] Further, one has to be precise as to what is meant by whether a term causes a significant imbalance in the parties' rights and obligations. Significant imbalance relates to the substantive unfairness of the contract, and requires consideration of the relevant term, together with the parties' other rights and obligations arising under the contract. Whether a term causes significant imbalance is a question of fact. The word "significant" means significant in magnitude or sufficiently large to be important. A significant imbalance may exist if the term is so weighted in favour of one party as to tilt that parties' rights and obligations significantly in its favour. This may be by granting to that party a beneficial option or discretion or power. But a term does not cause a significant imbalance if there is a meaningful relationship between the term and the protection of a party, and that relationship is reasonably foreseeable at the time of contracting. And that is the case with the arbitration agreement here." [Emphasis by respondent].

1. The respondent also referred to OPR WA Pty Ltd v Marron [2016] WASC 395 at [45]. That paragraph stated:

"45 Whether or not there is a significant imbalance is a question of fact, and the requirement of a 'significant imbalance' directs attention to the substantive unfairness of the contract."

(a) the site fee increase term was agreed between the parties at the date of entry into the site agreement, and cannot be amended by the respondent unilaterally,

(b) as the Supreme Court held in Rowe, each integer of the site fee increase term may be definitely ascertained by reference to objectively determinable inputs, and does not involve the exercise of any discretion by the respondent;

(c) on its face, the site fee increase term bears a rational relationship to the subject matter of the site agreement. The applicant is provided access to a site, including a supply of water, electricity, telecommunications and other utilities. He receives, in addition, the benefit of services performed by the respondent in maintaining the residential community in the long term. The site fee agreement reflects that the site fee is to increase in proportion to anticipated increases in the operator's costs of providing the services which it is required by the site agreement and under the RLLC Act to provide, while ensuring that the operator remains economically viable.

6.8 There is no substantial unfairness in a contract akin to a lease which provides that the rent will increase at regular intervals over time in a manner proportionate to increases in the landlord's costs, not subject to any discretion of the landlord, according to a formula fixed at the outset."

1. The respondent did not address the applicant's submission that the respondent "is already comfortably cushioned against increases in costs by the provision for a fixed amount increase of 3.75% plus any increase in the CPI".

1. In Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377 (CLA Trading), Gilmour J stated, at [54]:

"(d) the 'significant imbalance' requirement is met if a term is so weighted in favour of the supplier as to tilt the parties' rights and obligations under the contract significantly in its favour - this may be by the granting to the supplier of a beneficial option or discretion or power, or by the imposing on the consumer of a disadvantageous burden or risk or duty ...;

(e) significant in this context means 'significant in magnitude', or 'sufficiently large to be important', 'being a meaning not too distant from substantial' ...;" [Citations omitted].

1. The meaning of "significant" was also considered in Director of Consumer Affairs v AAPT (2006) VCAT 1493. In that case Morris J observed at [33]:

"The word "significant" simply means "important" or "of consequence". It does not mean "substantial". It is not a word of fixed connotation and besides being elastic is somewhat indefinite. However, in its context, it is designed to identify an imbalance, to the detriment of the consumer, which should be regarded as unfair. In this sense the definition is circular. But it is impossible to avoid the notion of fairness in determining whether a term causes significant imbalance, even though this exercise is designed to ascertain whether a term is unfair."

1. In my view there is clearly a significant imbalance between the rights and obligations of the parties arising from the impugned term. This is demonstrated in practical terms by the fact that it does not appear that the respondent has at any time sought to increase the applicant's site fees by the full amount calculated pursuant to the impugned term. The site fee increase notified to the applicant in 2023 incorporated only the increase in the consumer price index and the fixed amount of 3.75%. There was no adjustment by reference to any increase in the specified costs.
2. In practice, it would appear, the impugned term operated to give the respondent a substantial degree of discretion in fixing site fees. Mr Whitmont's evidence explaining the reasons why site fees had not been increased for a number of years tends to support that conclusion.
3. The decision of Garling J in Rowe No 1 concluded that each of the integers incorporated in the calculation set out in the impugned term was objectively determinable and not subject to adjustment at the respondent's discretion. His Honour did not determine that the respondent had no capacity to influence the amount expended on the items listed in the third integer.
4. The High Court in Karpik v Carnival plc [2023] HCA 39; 98 ALJR 45 (Karpik) stated, at [53]-[54]:

"53 The first element requires the court to consider whether the class action waiver clause would cause a significant imbalance in the parties' rights under the contract. On its face, it did. The class action waiver clause was not for the benefit of Mr Ho. The class action waiver clause operated as one of a number of constraints in cl 15 on Mr Ho, not on Princess. The whole of cl 15, on its face, is stated to be "for the benefit of the Carrier and certain third party beneficiaries [defined] in Section 1". And the class action waiver clause (cl 15(C)) is particularly one-way in its terms because it operates to impose limitations on passengers but in no way restricts the options of the carrier. Put in different terms, without the class action waiver clause, there is already an imbalance as between Princess and Mr Ho concerning vindication of their respective rights under the contract, in that there are various other limits in cl 15 upon the consumer but not upon Princess.

54 It can be accepted that the class action waiver clause did not impede or affect the existence of Mr Ho's individual right to sue, or his capacity to exercise that right. But the class action waiver clause had the effect of preventing or discouraging passengers from vindicating their legal rights where the cost to do so individually was or may be uneconomical. Mr Ho paid a ticket price of CAD1,796.17 for the voyage. The cost of commencing and prosecuting a typical claim arising out of the 13-day cruise holiday, brought as an individual proceeding, may well not be economically viable. This is so regardless of the individual circumstances of Mr Ho and the nature of his particular claims. The relevant inquiry in s 24(1)(a) is whether the term "would cause a significant imbalance in the parties' rights and obligations arising under the contract" (being a standard form contract), not whether a particular party is personally able to cope with such an imbalance. And the answer is that it did."

1. Those statements may be adapted to the circumstances of this case. Clearly the impugned term is not for the benefit of the applicant. As noted above, the applicant had no capacity to resist a demand by the respondent for any increase in site fees up to the full amount calculated in accordance with the formula. The respondent on the other hand, had the capacity to fix any increase in site fees it sought, provided it was less than or equal to the full amount calculated in accordance with the formula.
2. The formula permits the respondent to increase site fees in two ways reflecting the general level of inflation. Mr Hochroth resisted the suggestion that the respondent was "triple dipping", but, in my view, it is indisputable that the formula set out in the impugned term does involve "double dipping", in the sense that it provides for cumulative increases by reference to two integers designed to allow for the effects of inflation.
3. I consider that I can take into account the common understanding and experience of inflation which recognises that, even though the consumer price index is merely a general measure of price increases, and individual prices will not rise or fall by the consumer price index, there is some correlation between increases in prices of different goods and services across the economy.
4. Thus, it would be expected that, if the consumer price index increases substantially, the price of electricity, water, gas, communications, insurance and rates will also increase substantially. The fact that the specified costs reflect only 30% of the total operating costs of the village, does not mean that, if the respondent increased site fees by the full amount calculated pursuant to the formula in the impugned term, it would not be receiving an increase in site fees incorporating a double measure of inflation. The formula does not provide for only 70% of the increase in the consumer price index to be brought into the equation and, in any event, there is, on top of the two measures of inflation, the further fixed percentage increase.
5. The comment in Karpik that it is not relevant whether a particular party is personally able to cope with the imbalance in rights arising from the relevant term is directed to the proposition that it is the impact of the relevant term on consumers as a whole, rather than the individual claimant in a particular case, which is relevant. The respondent's submission, suggesting that the applicant had conceded that the relative capacity of the respondent on one hand and the residents on the other to absorb price increases is irrelevant to the question of imbalance, misconstrues the applicant's submissions. The capacity of the applicant personally to meet any increase in site fees is not relevant to the question whether there is a significant imbalance in the parties' rights and obligations. The capacity, to meet increased site fees, of the general class of site holders in the Village who are subject to site fee increases in accordance with the impugned term, is a relevant factor in determining that question.
6. The comment in the last sentence of [344] of the judgment in Dialogue Consulting suggests there is overlap between the question whether there is significant imbalance and the question whether a term is reasonably necessary for the protection of a party's interests.

1. As noted above, the onus of proving that the impugned term is reasonably necessary in order to protect the legitimate interests of the respondent falls upon the respondent.

"The respondent has a legitimate financial interest in ensuring that it remains profitable and viable as the operator of the community in which the applicant lives. The site fee increase term is reasonably necessary to protect that legitimate interest, by ensuring that the respondent receives sufficient revenue referable to the applicant's site to meet its obligations as an operator to ensure the long-term financial viability and well-being of the community."

1. The respondent noted that the impugned term has five components and that the fourth and fifth, that is changes in GST and rounding up to the nearest dollar, should be self-explanatory and not controversial.
2. In respect of the first to third components, the respondent submitted:

"6.11 ... The first component, CPI, serves to ensure that site fees adjust with inflation and thus, are not eroded in real terms over time. The third component, a proportional share of any increase in costs of electricity, water and other specified utilities, is appropriate to protect the respondent from increases in those costs, in circumstances where the respondent on-supplies those services for the benefit of the applicant. The applicant is required to pay his proportional share of any increase.

6.12 That leaves the second component, 3.75%. That component is reasonably necessary to protect the respondent's financial position from other increases in its cost base, aside from provision of utilities and general inflation. Utilities and taxes comprise only about 30% of the respondent's operating costs. Other costs of the respondent include wages (increases in which are subject to labour market conditions which may not be captured by CPI inflation), costs of repairs and maintenance of community assets, capital works and upgrades, and unforeseen operating costs.

6.13 By way of example, the respondent anticipates undertaking upgrades to the road and plumbing networks in the community in the coming years, which are anticipated to cost around $3 million (of which $627,000 has already been incurred). Such works, when completed, will benefit the whole community including the applicant. Unforeseen works include works required to upgrade electricity meters at sites in the community to smart meters, as required by a recent decision of the Australian Energy Regulator, and upgrading infrastructure for solar panels.

6.14 The operator is obliged under the RLLC Act to act for the long term benefit of the community. It is legitimate for an operator to seek to agree site fee increase terms which provide a reasonable assurance of revenue to meet community needs and maintain the financial viability of the community. An operator must be prepared to meet unforeseen expenses, such as pandemics and the changing requirements of government policy and planning controls. In considering the question of whether a term is reasonably necessary to protect the respondent's legitimate interests, the Tribunal should be mindful that the site agreement is (at least potentially) a long term contract of indefinite duration. It is not uncommon for site agreements to be in place for fifteen years or more at this community."

1. The respondent further submitted that the fact that the respondent has been able to provide temporary reductions in site fees does not detract from the proposition that the impugned term is reasonably necessary to protect the respondent's legitimate interests. The respondent suggested that, for the Tribunal to conclude that the respondent's conduct in offering temporary reductions compelled the conclusion that the impugned term itself was unfair, "would only disincentivise operators from offering temporary reductions where appropriate."

1. The applicant's written submissions on this issue, filed before the applicant had seen the respondent's submissions, were:

"[I]f the [respondent's] argument is that it is legitimately interested in the profitability of its operations, it would have to bring evidence of its costs of running the business and its existing profitability. It may also be necessary to show that its profit margins on the KNV operation are comparable with industry standard profitability. Without access to financial records of the operator it is difficult to guess what it might show but it is striking that, when the term is applied, the operator is enabled to recover any increase of its costs caused by general inflation, plus any increase in rates, taxes and communications costs, plus a flat rate 3.75%. On its face, this more than secures a profit margin; it enables it to increase."

1. I do not consider that the respondent has established that the impugned term is reasonably necessary in order to protect the respondent's legitimate interests.
2. The evidence relied upon by the respondent does not establish the factual propositions upon which the respondent's submissions on this issue rely. Neither of the witnesses whose untested evidence is relied upon stated that all of the first three elements or integers in the calculation were necessary. Mr Whitmont only referred to the second and third elements. He did not seek to justify the additional inclusion of the first element, CPI. Mr Staples said no more than that price adjustments based on CPI alone would not ensure that the respondent receives sufficient revenue to "cover the cost of all exigencies".
3. The conclusion in par 7 of Mr Staples' statement is not supported by any form of reasoning or explanation. I accord it no weight. Mr Booth's adoption of Mr Staples opinion likewise warrants being given no weight.
4. As the applicant's submissions pointed out, it would be expected that, to establish that the impugned term was reasonably necessary to protect the respondent's legitimate interests, the respondent would have led evidence of its financial position, including detailed evidence disclosing revenue and expenditures, and the extent to which the respondent was operating profitably.
5. To the extent the respondent suggests that potential future capital works might require increases in site fees well in advance of the general level of inflation (which, as I have outlined above, is an obvious consequence of the application of the impugned term), the respondent might have been expected to have disclosed evidence of its capital resources, including its capacity to borrow, and the borrowing costs likely to be incurred. The generic statement by Mr Whitmont that, as at June 2024, the respondent had incurred about $627,000 on upgrading roads within the Village and that upgrades to the road and plumbing networks would cost at least $3 million, provides no assistance to the Tribunal in determining whether the impugned term is reasonably necessary to protect the respondent's legitimate interests. There is no evidence where that money was expected to come from or the extent to which the expenditure of that money would increase the expenses incurred by the respondent.
6. Ultimately, the respondent's submissions on this issue amounted to the proposition that, in order to provide "reasonable assurance of revenue to meet community needs and maintain financial viability of the community", the respondent needed the capacity to increase site fees every year by an amount significantly in excess of the general level of inflation.
7. To establish that proposition, significantly more evidence was required than the respondent adduced. As noted, the weight of the evidence in Mr Whitmont's affidavit and Mr Staples' statement was significantly diminished by the fact that neither witness was available to be cross-examined. In any event, as also noted above, even if accepted without question, Mr Whitmont's affidavit and Mr Staples' statement would be insufficient to establish that the impugned term was reasonably necessary to protect the legitimate interests of the respondent.
8. The fact, that the respondent has not found it necessary at any time to increase site fees by the full amount calculated in accordance with the impugned term, reinforces the conclusion that the term is not necessary to protect the respondent's interests. Relying on the fact that the respondent has not demanded the full amount it might have claimed would not, contrary to the respondent's submission, disincentivise operators from offering temporary reductions where appropriate. It rather should encourage any operator seeking to defend such a term to provide the detailed evidence of its financial position which would demonstrate (if it were possible to demonstrate) that the granting of concessions by the operator arose from particular circumstances and not from the fact that the site fees calculated in accordance with the term were well in excess of the amount necessary to ensure the financial stability of the operator.

Transparency and the contract as a whole (s 24(2) of the ACL)

1. Section 24(2) of the ACL requires me, in determining whether a contract term is an unfair contract term, to have regard to the extent to which the term is transparent and the contract as a whole.
2. In CLA Trading, Gilmour J stated at [54]:

"(f) the legislation proceeds on the assumption that some terms in consumer contracts, especially in standard form consumer contracts, may be inherently unfair, regardless of how comprehensively they might be drawn to the consumer's attention ...; and

(g) in considering 'the contract as a whole', not each and every term of the contract is equally relevant, or necessarily relevant at all. The main requirement is to consider terms that might reasonably be seen as tending to counterbalance the term in question" [citations omitted]

"6.17 The site agreement as a whole tells against the site fee increase term being unfair. It specifically stated that the term is negotiable. It also provides the applicant with the right to sell his home free of interference by the operator (cl 26), and with the right to terminate the site agreement on 30 days' written notice to the operator (note 1 and s 117 of the RLLC Act). In other words, if the applicant does not wish to continue paying site fees at the level provided for by the site agreement, he is able to sell his home or move it to a different community."

1. That submission ignores both the transaction costs involved in seeking to sell a home, the effect excessive site fees are likely to have on the sale price, and the cost of moving a transportable home.
2. In my view there is nothing in the site agreement as a whole that might reasonably be seen as tending to counterbalance the impugned term or the capacity of the respondent to increase site fees substantially in excess of the general level of inflation.
3. The High Court confirmed in Karpik that the transparency of a term may affect the evaluation of the satisfaction of each of the elements of the statutory definition of "unfair". The High Court observed (at [32]):

"The requirement to consider the transparency of an impugned term is relevant to, and may affect, the analysis of the extent to which the term is unfair as assessed against each of the elements in s 24(1)(a) to (c). That is, the inquiry as to transparency is not an independent and separate inquiry from whether a term is unfair pursuant to s 24(1). The greater the imbalance or detriment inherent in the term, the greater the need for the term to be expressed and presented clearly; and conversely, where a term has been readily available to an affected party, and is clearly presented and plainly expressed, the imbalance and detriment it creates may need to be of a greater magnitude."

1. Although the applicant's evidence was that his financial advisor had found the impugned term confusing, I do not consider that the term is not reasonably transparent. The term may not be as transparent as it might have been and there are elements, in particular the passages appearing in parentheses, which could be confusing, particularly to a prospective site owner who is not familiar with accounting concepts.
2. I do not consider that the extent to which the term is transparent overcomes the imbalance and detriment which the term causes to site owners such as the applicant.
3. I note that s 25 of the ACL includes a non-exhaustive list of examples of the kinds of terms of a consumer contract that may be unfair. Neither party suggested that any of those examples was relevant to the determination of whether the impugned term is an unfair contract term.

1. The respondent submitted that the impugned term is excluded from the unfair contract regime because it sets the "upfront price" payable under the site agreement.
2. The respondent referred to the decision of Banks-Smith J in Australian Competition and Consumer Commission v Ashley & Martin Pty Ltd [2019] FCA 1436 at [80]- [81], where his Honour, after referring to the UK House of Lords and Supreme Court decisions in Director-General of Fair Trading v First National Bank plc [2001] UKHL 52; [2002] 1 AC 481 and Office of Fair Trading v Abbey National plc [2009] UKSC 6; [2010] 1 AC 696, and noting that the UK legislation was not identical, held:

"80 Regardless, useful aspects of the reasons in Abbey National include:

(a) it is important to recall that the provision excludes an attack on fairness only insofar as the relevant charges comprise the price or remuneration and only insofar as the attack relates to the adequacy or appropriateness in amount of the price or remuneration: it does not exclude an attack on the terms on other grounds ...;

(b) not every provision for payment is rendered immune from scrutiny. There can be monetary consideration that does not constitute either price or remuneration of goods or services provided in exchange, an example being the charges considered in First National Bank ...;

(c) care should be taken not to exclude price or remuneration from the application of reg 6(2) on the basis that it is 'ancillary', 'incidental', 'subordinate' or the like. Such descriptions may be of some assistance but 'it is important, in considering provisions which apply across an extraordinarily wide range of consumer contracts, to treat them with caution' ...; and

(d) nor do the expressions 'core term' or 'essential term' substitute for considering the content of paragraphs (a) and (b) of reg 6(2) .... A supply of services may be simple or composite. There may be no principled basis upon which to assess that some components are more 'essential' than others, and it may be that the main subject matter must be described in general terms. Similarly, it may be difficult to ascertain which price components are 'essential'. The regulation is not concerned with the 'essential price' but any consideration that falls within its language ... .

81 It goes without saying that what might define the main subject matter and set the upfront price payable for the purpose of s 26 of the ACL will always depend upon the particular contract being construed. Delineation of terms by taxonomy or hierarchy will not necessarily assist with the application of s 26. Instead, it is important to steadily bear in mind the terms of the provision itself and its object, being to protect the 'basis for the existence of the contract' ... whilst otherwise leaving open to challenge the terms of a contract that might be unfair." [Citations omitted]

1. The respondent identified three elements involved in determining whether a term sets the upfront price payable under a contract:

(1) The term fixes the consideration provided or to be provided for the supply sale or grant under the contract;

(2) The consideration must be disclosed at or before the time the contract is entered into;

(3) The consideration must not be contingent on the occurrence or non-occurrence of a particular event.

1. The respondent submitted that, in respect of the first element, the site fees were "akin to" the rent fixed under a lease, and that, that is "a paradigm example of consideration paid over time". The respondent submitted: "[p]lainly, the consideration for the right to occupy a site is not limited to the initial weekly site fee payable." The respondent suggested that, if that were not the case, "application of the provision could have capricious results, and might vary according to the form but not substance of a term".
2. In respect of the second element, the respondent submitted that the consideration was disclosed at or before the time the contract was entered into, in that both the disclosure statement provided to the applicant, and the site agreement itself "set out and disclose the site fees and how they will be increased".
3. In respect of the third element, the respondent's submissions addressed the five elements of the impugned term separately, submitting that:

"(a) positive change in the CPI - this is not the occurrence or non- occurrence of an event, but rather the linking of the site fee increase to a well-known index;

(b) 3.75%-this does not involve the occurrence or non-occurrence of an event;

(c) a proportional share of any increase in specified costs of the operator - again this does not involve the occurrence or non-occurrence of an event but rather ties the site fee increase to increases in costs incurred by the operator;

(d) change in the GST - not an event but rather an increase in tax applicable to the site fees;

(e) rounding up - does not involve the occurrence or non-occurrence of an event."

1. The respondent also submitted that the impugned term could be considered "in contradistinction" to, for example, default interest applicable to a consumer credit contract upon the debtor missing a payment.
2. The respondent referred to relevant paragraphs of the Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth):

"5.63 Consideration includes any amount or thing provided as consideration for the supply of a good, service, financial service, financial product or a grant of land. It would also include any interest payable under a consumer contract.

5.64 The exclusion of upfront price means that a term concerning the upfront price cannot be challenged on the basis that it is unfair. Having agreed to provide a particular amount of consideration when the contract was made, which was disclosed at or before the time the contract was entered into, a person cannot then argue that that consideration is unfair at a later time. The upfront price is a matter about which the person has a choice and, in many cases, may negotiate.

5.65 The upfront price covers the cash price payable for a good, service, financial service, financial product or land at the time the contract is made. It also covers a future payment or a series of future payments.

5.66 The definition also requires that the upfront price must be disclosed at or before the time the contract was entered into by the parties. In the case of most transactions this is reasonably straightforward, as a key pre-condition of the transaction occurring is an understanding of the price to be paid.

5.67 A key consideration for a court in considering whether a future payment, or a series of future payments, forms the upfront price may be the transparency of the disclosure of such a payment, or the basis on which such payments may be determined, at or before the time the contract is made.

5.68 In the context of non-financial services contracts, another relevant consideration is compliance with section 53C of the TP Act (which commenced on 25 May 2009), which imposes specific obligations in relation to the disclosure of a single price in many cases.

5.69 Other consideration (that is, further forms of consideration which are not part of the upfront price) under the consumer contract that is contingent on the occurrence or non-occurrence of a particular event, is excluded from the determination of the upfront price.

5.70 Terms that require further payments levied as a consequence of something happening or not happening at some point in the duration of the contract are covered by the unfair contract terms provisions. Such payments are additional to the upfront price, and are not necessary for the provision of the basic supply, sale or grant under the contract." [Emphasis by the respondent]

1. The respondent submitted that the policy behind the exclusion of the "upfront price" from the unfair contracts regime, as disclosed by the Explanatory Memorandum, was that:

"[I]t is inequitable for a person to enter into a contract for a price which is transparently disclosed and then turn around and claim that the price is unfair, thus leaving the counterparty bound to the contract but without the benefit of the essential consideration payable."

1. The respondent submitted that is what the applicant was seeking to do.
2. The respondent further submitted:

"4.12 There are important policy considerations as to why the unfair contract regime excludes the upfront consideration payable under a contract. As the Federal Court observed in Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377 at [54(a)], "the underlying policy of unfair contract terms legislation respects true freedom of contract and seeks to prevent the abuse of standard form consumer contracts".

4.13 The ACL regime does not, therefore, provide consumers with a mechanism to avoid their responsibility to pay an agreed-upon price under a consumer contract.

4.14 The policy of the RLLC Act reinforces the same conclusion. The objects of the RLLC Act have been referred to above. Those objects "reflect that the RLLC Act seeks to strike a balance between the rights of homeowners and operators": Hometown Australia Lennox Pty Ltd v Schoenheimer [2023] NSWCATAP 128, [23].

4.15 It would be inimical to the objects of the RLLC Act to permit homeowners to challenge a site fee increase term as unfair under the ACL. The whole point of s 65 in permitting site fees to increase by a "fixed method" is to create certainty for operators and home owners as to the consideration that will be payable. Operators need such certainty to plan for and protect the financial viability of a residential community. This concern is particularly acute where, as with the applicant's site agreement, the site agreement does not expire (s 31 of the RLLC Act) and a mechanism for ensuring site fees increase over time is therefore a core (and agreed) component of the price payable."

1. In the course of his oral submissions, Mr Hochroth also referred the Tribunal to Jeannie Paterson, Unfair Contract Terms in Australia (Lawbook Co, 2012) at [4.180] where the learned author states:

"[4.180] Terms providing for a variable interest rate payable under a credit contract are terms to which the UCTL [Unfair Contract Terms Law] does not apply, on the ground that these terms set the upfront price under the contract. Variable interest rates are payable for the of credit under the contract and are disclosed at the time the contract grant is made. Terms providing for a variable interest rate might also be characterised as defining the main subject matter under the contract; the main subject matter of the contract being a loan with a variable interest rate determined by the lender. It is the very substance of the contract, understood by consumers, that the interest rate will be variable. For this reason, a term providing a credit provider with the power to set a variable interest rate is not analogous to the type of term discussed above to which the [UK legislation] will apply, which provides a trader with the power to vary an already agreed upfront price."

1. The applicant submitted that it was inimical to the policy underlying part 2-3 of the ACL to exclude from the operation of its provisions all potential mechanisms for increasing the price paid for an ongoing service over the term of a contract to provide that service. The appellant submitted that that would be the effect of acceptance of the respondent's submissions in respect of s 26.
2. The applicant referred to the judgement of Banks-Smith J in ACCC v Ashley & Martin Pty Ltd, at [82]-[84]:

"[82] Section 26 is drafted to protect from assessment a term 'but only to the extent' that it defines the main subject matter or sets the upfront price. The inclusion of the words 'but only to the extent' indicates that there is no generalised protection of any term that happens to touch upon obligations to supply goods or services.

[83] Further, the provision is drafted with precision. It does not utilise general drafting expressions that are often used to denote a connection. That is, it does not refer to terms that 'relate to' or 'concern' supply or price. It is more specific. It addresses terms that 'define' the main subject matter or 'set' the upfront price.

[84] Such level of precision does not lead to a task that is necessarily complicated. One would expect that in many cases identifying the main subject matter and the upfront price (with the assistance of the definition) will often be possible with little more than the application of common sense. Indeed, one would hope that is generally the case with consumer contracts. However, there is no doubt there will be cases where more complex questions may arise, for example as to whether particular charges or payments are contingencies or part of a package that comprises an upfront payment."

1. The applicant submitted that the calculation contained in the impugned term did not fix an upfront price, but rather determined a process by which the fees payable over time would be increased.
2. The applicant further submitted that all elements of the calculation other than the fixed 3.75% increase were contingent on the occurrence or non-occurrence of a particular event.

1. For the reasons which follow, I am not satisfied that the impugned term is excluded from the operation of s 23 of the ACL by s 26.
2. I do not consider that the characterisation of the provision for annual increases in site fees by reference to five separate elements or integers, as setting the upfront price payable for the right to occupy the applicant's site, is as clear as the respondent submits.
3. I accept that an upfront price may include periodic payments made during the term of an agreement. But it is not clear to me why terms providing for the adjustment of those periodic payments, in ways which cannot be predicted with confidence at the time of entry into the agreement, should constitute part of the upfront price.
4. In my view, it would be stretching the meaning of the words "disclosed at or before the time the contract is entered into" to interpret them so as to cover a price increase which cannot be quantified at the time of entry into the contract.
5. Nevertheless, I am satisfied that, even if the impugned term could properly be described as specifying a consideration disclosed at the time the contract is entered into, all substantial elements of the calculation, other than the fixed percentage increase, constitute consideration that is contingent on the occurrence or non-occurrence of a particular event.
6. It may be common experience that prices tend to rise, but deflation is not an unknown phenomenon. Hence, it cannot be said that a positive change in the consumer price index is inevitable or that increases in the costs incurred by the respondent in relation to electricity, water, gas, communications, insurance, rates or other government charges or taxes are inevitable.
7. The term providing for site fees to increase by reference to positive changes in the consumer price index is contingent upon there being a positive change in the consumer price index.
8. The term providing for site fees to increase by a proportion of the increase in costs incurred by the respondent in respect of the specified items is contingent upon the costs incurred by the respondent in respect of those items increasing.
9. Unquestionably, in my view, the term providing for site fees to increase by reference to the effect of any change in the rate of GST is contingent upon there being a change in the rate of GST.
10. Each of:

(a) a positive increase in the CPI;

(b) an increase in the costs incurred by the respondent in respect of the specified items; and

(c) a change in the rate of GST

are a "particular event" within the meaning of s 26(2) of the ACL.

1. Even the rounding provision might be described as contingent upon the site fees otherwise calculated not being a whole dollar figure, but it is not necessary to explore that issue.
2. I do not agree with the proposition expressed in Unfair Contract Terms in Australia at [4.180] relied upon by Mr Hochroth. As Mr Batley pointed out, that conclusion was not accompanied by any deeper analysis or reasoning.
3. I do not agree that variable interest rates are disclosed at the time the contract is entered into. Nor do I agree that variable interest rates define the main subject of the contract, or that variable interest rates are not contingent on the occurrence or non-occurrence of a particular event. There are many reasons why most loan contracts providing for variable interest rates will not be unfair contracts, but the frequent use of such contracts is not reason to exclude them from the regulation of unfair terms. It seems inconsistent with the objective of the unfair contract terms laws that a contract which provided a lender with unfettered discretion to vary interest rates should not be susceptible to being challenged as an unfair contract on the basis that the capacity of the lender to vary interest rates was disclosed at the time of entry into the contract.
4. I also note that Unfair Contract Terms in Australia also states, at [4.170]:

"[4.170] A power to vary the price payable under a contract that has already been agreed between the parties will be subject to review under the UCTL. Such powers do not 'set' the upfront price payable under the contract. Moreover, the list of examples of the kinds of terms that may be unfair under the UCTL include the example of 'a term that permits, or has the effect of permitting, one party to vary the upfront price payable under the contract without the right of another party to terminate the contract'."

1. The author does not explain how the proposition set out at [4.180] can be reconciled with that statement.
2. In any event, regardless of the position with loan agreements providing for variable interest rates, in my view the adjustment of site fees by reference to positive changes in the CPI and increases in the respondent's operating costs clearly fall within the exclusion from the definition of "upfront price" provided by the closing words of s 26(2) of the ACL.
3. I recognise that in Equity Financial Planners Pty Ltd v AMP Financial Planning Pty Ltd [2023] FCA 741; 169 ACSR 71 Moshinsky J at [695] concluded that a deferred payment did not fall within the concluding words of s 26(2) of the ACL, because "[w]hile the amount of the Deferred Payment can be adjusted, liability to pay the Deferred Payment is not contingent", but also because "the deferred payment does not fall within the words 'other consideration'". I do not consider that that conclusion has any relevance in the context of these proceedings.

1. By reason of the foregoing conclusions, I find that the impugned term is void as an unfair contract term pursuant to s 23 of the ACL.
2. The respondent correctly pointed out that the Tribunal has no power to declare a contract term void pursuant to s 23 of the ACL.
3. As the Appeal Panel held in Clark v Electrical Home-Aids Pty Ltd [2017] NSWCATAP 63, at [102]:

"The Tribunal does not have jurisdiction to declare contracts (or terms of contracts) void. However the Tribunal, being a "court" for the purposes of Part 2-3 of the ACL (s 23 - 28 incl of the ACL) - see s 30(4) of the Fair Trading Act 1987 (NSW) ("FTA") - is able to make a finding that a term of a contract is unfair, and then grant relief in the nature of restitution pursuant to s 79N(h) of the FTA." [Footnote omitted]

1. The respondent accepted that the Tribunal has power to provide monetary relief in respect of the unfairness of the impugned term. However, the respondent disputed that the Tribunal has power to grant a remedy "predicated on the voidness (as opposed to the unfairness) of a contractual term". The respondent submitted that, if the applicant otherwise succeeded, the Tribunal should "mould" relief to fit the circumstances of the case:

"Rather than finding that the site fee increase term was completely inoperable, the Tribunal could form a view as to what a 'just' site fee increase term would look like, and require a refund only of site fees paid over and above a just amount."

1. The respondent suggested that both s 79N(a) of the Fair Trading Act and s 157(1)(d) of the RLLC Act would empower the Tribunal to make such an order.
2. I disagree that the Tribunal does not have the power to grant a remedy predicated on the voidness of a contractual term.
3. The respondent's submission is contradicted by the passage from Clark v Electrical Home-Aids Pty Ltd cited above.
4. Moreover, the note to s 71 of the Fair Trading Act states:

Section 23 of the ACL provides that an unfair term in a consumer contract that is a standard form contract is void, although the contract continues to bind the parties if it is capable of operating without the unfair term. If a contract claim in relation to a consumer contract containing such an unfair term is brought before a court or tribunal (such as the Civil and Administrative Tribunal) having jurisdiction to deal with the claim, the court or tribunal will be required to treat the term as being void.

1. That note is not part of the Fair Trading Act (s 4(10)) but may be taken into account to confirm the meaning of the text or to resolve ambiguity in interpreting s 71 of the Fair Trading Act: Interpretation Act 1987 (NSW), s 34. Section 71 limits the circumstances in which the Supreme Court may make a declaration pursuant to s 250 of the ACL that a contract term is unfair, but subs (3) provides:

(a) limit any other power of the Supreme Court to make declarations, or

(b) prevent a party to a consumer contract that is a standard form contract from bringing proceedings in a court or tribunal of competent jurisdiction for relief in respect of a term of a consumer contract that is void because it is unfair.

1. The site agreement is capable of operating without the impugned term and thus continues to bind the parties: s 23(2) of the ACL.
2. Section 68 of the RLLC Act provides that the Tribunal has power to order a refund to the applicant of overpaid site fees on the ground that the increase of site fees did not comply with a requirement of Div 3 of Pt 6 of the RLLC Act. Division 3 of Pt 6 of the RLLC Act includes s 65, which provides that site fees may be increased only in accordance with that Division. Section 65(2) provides that a site agreement may provide for site fees to be increased. In the absence of the impugned term, the site agreement did not provide for site fees to be increased and any demand by the respondent for increased site fees was not in accordance with Division 3 of Part 6.
3. Accordingly, the notice of increase of site fees issued to the applicant by the respondent on 18 November 2023 was invalid and the increase in site fees demanded in that notice did not comply with the requirements of Div 3 of Pt 6. It follows that all increased payments made by the applicant since that date were "overpaid site fees" and the Tribunal has power, pursuant to s 68 of the RLLC Act to order a refund of those overpaid site fees.
4. This would be the case even if it were concluded that part of the impugned term (eg the fixed percentage increase) was not an unfair contract term and remained valid. Because the notice of increase served on the applicant calculated the increase by reference to at least one invalid element, the notice was wholly invalid and ineffective.
5. Before service of the notice on 18 November 2023, the applicant's site agreement required him to pay fees of $242 per week.
6. Mr Whitmont's affidavit annexed a statement of the applicant's account up to 13 June 2024. That discloses that the applicant had, since 7 December 2023 been paying $268 per week. The overpayment made by the applicant between 7 December 2023 and 13 June 2024 was $702 (27 weeks at $26 per week).
7. The Tribunal does not have the evidence necessary to calculate the amount the applicant has overpaid since 13 June 2024.
8. I note that the Residential (Land Lease) Communities Amendment Act 2024 (NSW) (the Amendment Act) amended s 65(2)(a)(ii) to provide that a fixed calculation may not use more than one element to calculate the increase. That amendment came into effect on 25 September 2024 but does not apply to pre-existing site agreements.
9. The transitional provisions, inserted into Sch 2 of the RLLC Act by the Amendment Act, provide for existing site agreements, which do not comply with the amended s 65, to continue until replaced by an agreement complying with the amended s 65 or varied so as to comply with the amended s 65, or until the "transition day", which is 12 months after the transitional provisions came into effect. If an existing site agreement is not replaced or varied so as to be compliant with the amended s 65 by the transition day, cl 23(2) of Sch 2 provides that site fees may only be increased by notice, in accordance with s 67.
10. As the transitional provisions came into effect on 11 December 2024, the transition day will be 11 December 2025.
11. It would not be appropriate to speculate concerning how those provisions will operate in respect of the applicant's site agreement.
12. I will direct the parties to file orders incorporating the correct calculation of overpayments made by the applicant up to the date of this decision. If the parties are unable to agree they should each file evidence and short submissions concerning the calculation. Subject to any submissions by the parties, the Tribunal will determine the amount of site fees overpaid by the applicant on the basis of the submissions and without a further hearing.
13. Although the applicant sought an order pursuant to s 68(2)(b) of the RLLC Act directing a refund of overpaid site fees to other home owners in the Village, I do not consider it appropriate to make such an order in this case.
14. A significant question would arise concerning whether the Tribunal could determine that the site agreements of any of the home owners who were party to the earlier proceedings contained a term relating to increases in site fees which was void as an unfair term pursuant to s 23 of the ACL. There is a finding, binding upon those homeowners, that their site agreements are not standard form contracts.
15. I have not been made aware of any other home owners in the Village who have "also had a non-compliant increase of substantially the same kind". The evidence of Ms Langker-Ferguson that there were around 200 home owners in the Village with site agreements containing fixed notice fee increase terms suggests that there would be around 150 home owners who were not party to the earlier proceedings who might be in that position. But I have no direct or specific evidence concerning any of them. In particular, I have no evidence concerning whether notices of fee increase were sent to other home owners at the same time as the applicant, nor any evidence concerning what fee increases might have been notified.

(1) The parties are to file with the Tribunal within 14 days of the date of publication of this decision a form of order requiring the respondent to refund to the applicant site fees which the applicant has overpaid since 7 December 2023.

(2) If the parties cannot agree on the amount to be refunded, each party is to file and serve upon the other within 14 days of the date of publication of this decision any further evidence relied upon to establish the amount of the overpayments, and submissions, not exceeding two pages, in support of the form of order for which that party contends.

(3) Subject to any submissions by the parties, the Tribunal will determine the amount of site fees overpaid by the applicant and the appropriate form of order, on the basis of the evidence and submissions filed pursuant to the previous order and without a further hearing.

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.