Gilbert v Gennacker Pty Ltd t/as Homestead Holiday Park; Gilbert v Hacienda Caravan Park Pty Ltd t/as Tweed River Hacienda Holiday Park

Evidence

1. The evidence lodged by the applicant included the notices of increase of site fees dated 20 January 2023, current company extracts showing Mr Wilmott and Ms Hickling are the sole directors of the respondent companies, and that Mr Wilmott and Ms Hickling are the sole directors of Jonval Builders Pty Ltd. A photograph of the community covered in water from the February 2022 floods that impacted the area, was also included. There was some evidence mixed with the written submissions lodged by Ms Gilbert, to which Ms Hickling objected on the basis it was not in a formal statement. Because the findings of fact that have been made are not contentious, nothing turns on that objection.
2. The evidence lodged by the respondents was the ABS CPI figure for September 2022, the Fair Work Commission National Minimum Wage Order Decision of September 2020/2021 and 2021/2022, the Hospitality Award 2020 wage rates, photographs and a map of the community, a Notice of Valuation of the Valuer General, a copy of Tweed Shire Council's Fees and Charges (but not a rates notice specific to the respondents), and a statement of Ms Hickling. Some oral evidence was also given at the hearing by Mr Wilmott and Ms Gilbert, and some further evidence was mixed in with further submissions of Ms Hickling.

Relevant legislation Sections 73 and 74 of the Act read; 73 Orders as to excessive increases in site fees 1. The Tribunal may, on application under section 71 or 72, make any of the following orders - 1. an order declaring that an increase in site fees is excessive, 2. an order reducing the amount of the increase by a specified amount, 3. an order setting aside the increase, 4. an order that the site fees must not exceed a specified amount or specified amounts, either - 1. from a specified day, not being earlier than the day from which the increased site fees were payable, or 2. during a specified period, 1. an order confirming the increase on the conditions (if any) that the Tribunal considers appropriate, 2. any ancillary order that the Tribunal, in the circumstances, thinks appropriate. 1. The Tribunal may make orders applying to individual participating home owners, groups of participating home owners or all participating home owners. 2. An order applies to all affected home owners in the community (other than those who opt out), unless the Tribunal is satisfied there is a strong reason for making separate orders for different home owners or groups of home owners. 3. The Tribunal cannot make an order that would result in an increase lower than that needed to cover any actual or projected increase (established to the satisfaction of the Tribunal) in the outgoings and operating expenses for the community since the previous increase (if any) in site fees for the community. 74 Matters to be considered about excessive increases 1. The Tribunal may have regard to any or all of the following factors when deciding whether to make an order under section 73 - 1. the frequency and amount of past increases in site fees for the community, 2. any actual or projected increase in the outgoings and operating expenses for the community as provided by the operator since the previous increase (if any) in site fees for the community, 3. any repairs or improvements to the community - 1. carried out by the operator since the previous increase (if any), or 2. planned by the operator for the period covered by the increase being reviewed, 1. the general condition of the community including its common areas, 2. the range and average level of site fees within the community, 3. the value of the land comprising the community, as determined by the Valuer-General, 4. the value of any improvements to the community (including common areas) paid for or carried out by home owners, 5. any explanation for the increase provided by the operator by notice in writing to the affected home owners,

(i) variations in the Consumer Price Index (All Groups Index) for Sydney,

(j) whether the increase is fair and equitable in the operation of the community,

(k) any other matters prescribed by the regulations.

Findings

1. In terms of the matters in section 74 the Tribunal may, not must, consider, there was little dispute. Those matters were contained mainly in the statement of Ms Hickling, and to some extent in the submissions of Ms Gilbert. They are;
2. Site fees were increased by 3.5% in 2020; 3% in 2021; and 3% in 2022. There is no submission these increases failed to cover any cost increases.
3. Although the applicant argued there was a degree of disrepair with roads and other infrastructure, viewing the evidence as a whole I find the communities are generally in good condition, and road maintenance is regular and ongoing. No significant improvements by the operator or homeowners have been made.
4. There is a fairly wide range of site fees, due to the times when site agreements commenced, and that some residents successfully challenged increases and others did not. There were no submissions as to how this impacts the issue of whether the site fee increases are excessive. It is just as likely to indicate some residents are already paying excessive site fees, than the site fee increases now objected to are not excessive.
5. The value of the land on which the communities are located has been increased in the Valuer General's annual notice by about 96%. There were no submission from either party as what use the Tribunal should make of this. It may be evidence that the respondent's rates have increased, but there is nothing such as a rates notice to show that, and it would have been a simple exercise to produce such a notice if that was the case.
6. The Consumer Price Index in the relevant 12 month period before the Notices of Increase were issued was 7.6%. This does not on its own tend to prove the operator has incurred any increase in its overall costs and expenses.
7. An explanation for the size of the increase was provided in the letters providing notice dated 20 January 2023. Those letters are headed Site (no) Notice of Occupation Fee Increase and state; "Following our standard annual review of the relevant costs of the caravan park operations pertinent to your site we wish to advise that as from Saturday 1 April 2023 your site fee for the above site will be $ (varying amount depending on current amount) per week plus electricity. The review has identified that relevant costs have increased by 7.63% (in the case of Hacienda and 7.52% in the case of Gennacker). With the considerable increase we have elected to absorb a portion of the amount and only pass on 7% being the movement in the Sydney All Groups Consumer Price Index annualised to September. Looking forward we trust that government's varying promises to implement policies to put downward pressure on increasing costs will be successful as this outcome will be best for your interests and ours. The movement in the costs of operating the caravan park and providing the goods and services relevant to your site and the common areas impact directly on the sustainability and continued viability of the caravan park. The increase in occupation fees is required to ensure the impacts of the relevant expense items are brought to account. The Park also requires a certificate or letter from a licensed tester or electrician stating your power lead connecting your dwelling to the Park power supply has been tested and tagged. The tag is valid for 12 months. Could you please arrange to supply this document to the park office by Friday 17th March 2023 if you have not already provided an up to date copy. We refer to the agreement relating to the occupancy of the site dated (relevant date). There are important terms within that agreement that relate to your responsibilities. We request that you refresh yourself of those terms and ensure that they are adhered to all at times" (The words in italics have been added by the Tribunal)
8. There was also oral evidence from Mr Wilmott, that the operator employs the same number of staff or contractors this year as it has in previous years, that the 13 new homes on the community have yet to produce an income, and that the costs of running the tourist operation on the site are separated from the costs of running the residential operation, by a formula or algorithm he has developed. However there is no cogent evidence to corroborate any assertion that the contractors or staff have had their remuneration increased since the last site fee increase, that the formula used to separate the costs of tourist operations from community costs is accurate, or that some or all of the costs associated with building 13 new homes have or have not been included in those costs ascribed to the running of the community. Those matters are uniquely within the knowledge of the respondent operators and are not disclosed.
9. In her statement, dated 14 July 2023, Ms Hickling asserts she is a Certified Practicing Accountant, has been involved in the caravan park industry for 20 years, has a Bachelor of Commerce, and has examined the accounts of the respondents operations and has determined net costs overall had increased by 7.52% in the case of Gennacker, and 7.63% in the case of Hacienda. Ms Hickling also outlines various increases in Tweed Shire Council costs, such as green waste fees, caravan park inspection fees and so forth. It is not stated what, if any of those increases have actually been incurred by the respondents, nor what the actual costs of them are. Ms Hickling also states the respondents' accounts are not audited and they are not required to be.
10. At hearing the applicant submitted there is a history of conflict between at least some homeowners and the respondents, and little if any credit should be given to the evidence from the directors of the respondents. In the applicant's submissions reference has been made to Commissioner for Fair Trading v Jonval Builders Pty Ltd & John Allan Wilmott [2019] NSWSC 1893, and Prothonotary of the NSW Supreme Court v Hacienda Caravan Park Pty Ltd (2023/42330). In my view, the very brief submissions of the applicant, do not warrant the making of findings as to adverse credit. Furthermore, the proceedings commenced by the Prothonotary, which are to determine if Hacienda is guilty of contempt for failing to comply with Tribunal orders are not yet decided, and it would be inappropriate to comment on them. Finally, it is unnecessary to do so, given it has been determined little weight is to be placed on Ms Hickling's evidence for the reasons below.
11. First, Ms Hickling, along with Mr Wilmott, are the sole directors of the respondents. Ms Hickling and Mr Wilmott are the sole shareholders in Hacienda. In relation to Gennacker, Jonval Pty Ltd is the holder of the only (two) ordinary shares. There are 1,000 shares issued in Jonval Pty Ltd, 500 to Ms Hickling and 500 to Mr Wilmott, and they are also the sole directors of Jonval Pty Ltd. Because of her directorships and shareholdings, Ms Hickling is clearly not an independent witness.
12. Secondly, the applicant's request to view the source documents on which Ms Hickling's analysis of the respondents' increase in operating costs was refused by the respondents. The bases of the refusal include privacy, cost, and obligations under the Corporations Law, none of which I find convincing. The same objections were dealt with in Gennacker Pty Ltd t/as Homestead Park v Bennet [2020] NSWCATAP 12 ("Gennacker") and dismissed. That case was an appeal from Bennett v Gennacker Pty Ltd t/as Homestead Holiday Park [2019] unreported published 1 August 2019, in which the Tribunal placed no weight on almost identical evidence from Ms Hickling. As submitted by the applicant, the Appeal Panel stated at paragraph 46 "The Appellant sought to justify its decision to withhold information from the Tribunal on the basis that to disclose information concerning its expenses would not be in its best interests. Whilst the Appellant was entitled to decide what level of detail it provided, it would follow that it must also accept the consequences of its decision. We note in passing that the Appellant did not elaborate on how the Appellant's interests would suffer if it disclosed more detailed financial information. If the Appellant was concerned about confidential information coming to the attention of a competitor it could have considered an application under s 64 of the NCAT Act (by which the Tribunal may restrict disclosure of information).

Consideration

1. In Gennacker the Appeal Panel also said at paragraph 44 "The Tribunal's task in considering whether to make an order under s 73 of the Act (in this case whether to declare that the increase was excessive) was to consider the factors set out in s 74. It is clear from the Decision that the Tribunal did so, including specifically the factors under s 74 (1) (b) (which concerns increase in outgoings and expenses) and under s 74 (1) (h) (which concerns any explanation for the increase provided by the operator by notice in writing to the affected home owners.) The Tribunal was critical of the lack of detail of the increases by category of expense and the lack of independence of the Appellant's main witness and concerned about the evidence concerning apportionment of expenses between the residential community and the tourist operations. The Tribunal's approach does not display any error of law or a cl 12 leave ground."
2. In Colin Davidson v Sea Change Living Pty Ltd [2023] NSWSC 292 ("Davidson"), Harrison AsJ considered the operation of section 73, and said at paragraphs 128 and 129; While it is not necessary for me to decide, my tentative view is that the decision in Glennacker is correct. The Tribunal's task in considering whether to make an order under s 73 of the RLLC Act (in this case whether to declare that the increase was excessive) was to consider the factors set out in s 74. From the decision the Tribunal did so, including specifying the factors under s 74(1)(b) (which concerns increases in outgoings and expenses) and under s 74(1)(h) (which concerns any explanation for the increase provided by the operator by notice in writing to affected home owners). From ss 67(4) and 74(h) that the operator must provide an explanation in the notice for the increase and that the Tribunal may have regard to the explanation. In addition the Tribunal may have regard to other factors referred to in s 74, some of which constitute information known only to the operator. The Tribunal was entitled to consider the evidence provided by the operator in order to determine that the increase in site fees was excessive because there was insufficient evidence explaining the increase in outgoings and expenses. It is my view that the Tribunal's consideration of the factors in s 74(1)(a) to (h) involves it in exercising an inquisitorial role to some extent.
3. Although that passage is not binding on the Tribunal it supports the approach taken by the Appeal Panel in Gennacker, and the decision below.
4. The respondents referred to the unreported decision of Senior Member Charles in RC 20/14239, published 30 July 2020, also involving Gennacker, and objections to site fee increases. It appears from the decision in that case that Ms Hickling gave evidence very similar to her evidence in this case, the Tribunal accepted it, and based on that evidence found the increases were not excessive. It appears the Tribunal in that case did not have the benefit of the Appeal Panel's decision in Gennacker, and Davidson had not been decided. The recent decision of a different Senior Member in Griffiths v Sea Change Living NSW Pty Ltd [2023] NSWCATCD 121 (25 September 2023), is further support for the conclusion I have reached.

Conclusion

1. The authorities referred to show the correct approach to determine an application under section 71, is to consider all of the factors in section 74, including any explanation given by the operator, and decide with regard to those and any other relevant factors, whether the site fee increase is excessive. In my view the lack of any cogent evidence or explanation to establish that either respondent has incurred any particular level of increase at all, means the increase must be regarded as excessive. To find otherwise where the only party with the evidence to conclusively prove an increase in costs withholds that evidence, would not be fair and equitable in the operation of the community.
2. Having made the determination the increase is excessive, the Tribunal is then required under section 73 (4) to ensure it does not make an order "that would result in an increase lower than that needed to cover any actual or projected increase lower than that needed to cover any actual or projected increase (established to the satisfaction of the Tribunal) in the outgoings and operating expenses for the community since the previous increase (if any) in site fees for the community."
3. Putting aside the issue of whether any increases in an operator's profits should be considered when determining what increase is "necessary" to cover outgoings and operating expenses, neither respondent has established any actual or projected increase in costs. While it might in some cases be reasonable to assume with a CPI figure of 7% an operator has incurred some increase, the CPI cannot be regarded as a "fallback" position for operators. In this case the respondents had the opportunity to put precise evidence before the Tribunal of the level of increase they may have incurred, or have projected, but have chosen not to do so. It is not for the Tribunal to hazard a guess about what, if anything, that may or may not be. Accordingly there should be orders;
4. The site fee increases in the notices dated 20 January 2023 are excessive.
5. The site fees must not exceed the level at which they were immediately prior to the increase in the notices dated 20 January 2023, for a period of 12 months commencing 1 April 2023.
6. The respondent is to refund all site fees overpaid since 1 April 2023. **********​​​​​​​ I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 December 2023