Griffiths v Seachange Living NSW Pty Ltd t/a Milton Valley Holiday Park

NCAT Appeal Panel|2020-01-28

Background

This is an appeal brought by a resident of a residential community regulated by the provisions of the Residential (Land Lease) Communities Act, 2013 (NSW) ("the Land Lease Act"). The appeal is from a decision of the Tribunal in the Consumer and Commercial Division declaring that a site fee increase was excessive and that the appropriate increase should be $11.16 per week. We shall refer to the Appellant as the "resident" and to the Respondent to the appeal as the "operator".
In the Notice of Appeal the resident states that the site fee increase should be limited to $4.90 per week (as opposed to the sum of $11.16 approved by the Tribunal).
The application at first instance was brought by the resident as representative of a number of home owners who occupy a residential site on a permanent basis in the residential community. It was common ground between the parties that the residential community contains 19 sites occupied by permanent residents and 104 sites by persons who occupy those sites on a basis which limits their occupation to 180 days each year. The parties refer to these occupants as the "annuals". It was agreed that the number of sites licensed to be occupied by "annuals" was 120. In addition, there are 21 sites licensed to be used by campers. In other words, the capacity of the residential community permits 19 permanent residents, 120 annuals and 21 campers. The number of actual occupants is 19 permanent residents, 104 annuals and the number of campers varies significantly from week to week.
The Decision and this appeal only concerns the permanent residents whose relationship with the operator is regulated by the Land Lease Act (except those who may have opted out under the provisions of that Act) and does not affect the annuals or campers whose relationship is not so regulated.
By a Notice of Site Fee Increase the operator proposed that the permanent residents' site fees would increase from 12 May 2019 as a consequence of increases in expenses totalling approximately $114,000. The decision under appeal ("the Decision") did not accept the operator's evidence that the expenses of the operator had increased to the extent claimed but did accept that expenses had increased by the sum of approximately $41,000. The operator has not appealed that finding.

Notice of Appeal

The resident filed a Notice of Appeal received by the Tribunal on 1 November 2019 in which it was stated that the Appeal Panel should make an order limiting the site fee increase to $4.90 on the basis of the increase in expenses of $41,000 by dividing that increase amongst the 160 sites in the community. The Notice of Appeal submitted that the Decision was against the weight of evidence because the number of licensed sites (160) was not used by the Tribunal. The Notice of Appeal also states that the question of apportionment was not raised by the Member at the Tribunal hearing. The resident states that he assumed that the apportionment undertaken by the Tribunal would be based on the number of sites. In some of the documents this was said to be 160 and in others 159 sites. The difference is immaterial. The resident quoted a Department of Fair Trading Fact Sheet concerning charges for electricity, gas, water and sewerage in support of the submission that apportionment of increase in expenses should be on the basis of the number of available sites.
The Notice of Appeal also referred to an Appeal Panel decision reported as Sunrise Property Holdings Pty Ltd v Gregg [2019] NSWCATAP 253 in support of the proposition that the increase in operating expenses should be apportioned amongst all of the available sites.
The Notice of Appeal further disputed the Tribunal's apparent reliance on a report known as the Nicholl's Report (which had been tendered by the operator) on the basis that that report did not comply with the Tribunal's Code with respect to expert evidence.
The resident's written and oral submissions in support of the appeal referred to the submissions recorded in the Notice of Appeal and these submissions may be summarised as follows: 1. The increase of $41,000 should be split equally amongst all available sites (160). 2. The increases in expenses does not take into account the fact that a portion of the increase was attributable to the availability of common facilities (eg. toilets and shower block). These facilities are not used by the permanent residents and only used by the annuals or campers. The permanent residents are therefore being asked to contribute to expenses for facilities not used by them. 3. The Nicholl's Report used calculations based upon occupied sites only rather than all available sites. The report relied upon 120 sites and the Member followed the same methodology, only changing the calculation by evidence as to the actual number of occupied sites. In other words, the Nicholl's Report referred to 120 sites whereas in the Decision the Member relied upon 104 occupied sites in respect of the annuals. 4. In addition, the Nicholl's Report weighted the allocation between permanents and annuals by reference to the maximum number of days in each year which the residents and annuals could occupy their respective sites. For the permanent residents the figure was 365 days each year (ie. no limitation) and for the annuals it was 180 days (ie. the annuals could not occupy their sites for more than 180 days per year). Mr Nicholls then attributed the contribution of the permanent residents at a higher level than their actual numbers proportionate to the annuals having regard to the number of available days in each year which the permanent residents and the annuals could use their sites. Mr Nicholls' conclusion was that the permanent residents should pay 23% of the increase in expenses whereas the Member in the Decision found that the appropriate share of the permanent residents was 27%. In the submission of Mr Griffiths both were wrong because both failed to take into account the full number of licensed sites (160) and also failed to take into account that the permanents do not in fact use common facilities whereas the annuals do. The result was to unfairly allocate the increase in expenses to the permanent residents to the benefit of the annuals.

Reply to Appeal and Operator's Submissions

The operator filed a Reply to Appeal which may be summarised as follows: 1. The resident's submission as to the apportionment method would result in campers who stay "at most weeks" and annuals who stay a maximum of 180 days per year, paying the same increase as the permanent residents. This is "without merit". 2. The Member was clear at the hearing at first instance in foreshadowing that he intended to take into account the number of occupied sites. In the submissions filed by the operator extracts from the transcript are included in support of this submission. 3. The Fair Trading Fact Sheet relates to utility charges, not site fee increases. 4. The Decision cannot be described as not fair and equitable or against the weight of evidence and there has been no significant new evidence that was not reasonably available at the time of the hearing at first instance.

Submissions in Reply

At the hearing of the appeal Mr Griffiths submitted that he did not understand that the Member would undertake the apportionment in the manner that he did and that the weight of evidence did not support that form of apportionment. Rather, the fair and equitable approach would be to allocate the increase equally among all available sites (160).

Decision

We are of the opinion that the appeal should be dismissed and the orders made in the Decision affirmed. Our reasons follow.
Appeals from decisions made in the Consumer & Commercial Division dated by the Civil & Administrative Tribunal Act, 2013 (NSW) ("the NCAT Act). In summary, it provides that an appeal lies as of right on any question of law or with leave on the grounds set out in clause 12 schedule 4 of the NCAT Act.
In many appeal cases, the Appeal Panel has described what is required to satisfy clause 12 schedule 4. The leading case in this area is Collins v Urban[2014]NSWCATAP17. Essentially, it is necessary for an appellant to establish that there has been a substantial miscarriage of justice because the decision under appeal was not fair and equitable, or was against the weight of evidence, or that significant new evidence has risen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). In addition, the Appeal Panel has a discretion as to whether to grant leave and would usually require to be satisfied that the decision under appeal raises, for example, an issue of principle, or has wider ramifications than the case itself, or that a clear injustice has occurred: see par 84 of Urban v Collins. None of the matters identified in par 84 are applicable to this matter.
In this case, the Member was firstly asked to consider whether the level of the increase in site fees was appropriate by reference to the increase in expenses incurred by the operator. The operator claimed that the increases amounted to the sum of $114,000 but the Member found that the increase established to the satisfaction of the Tribunal totalled $41,000 (approximately). As stated earlier the operator has not appealed the Decision.
Having made the finding as to the appropriate level of actual or projected increases in operating expenses was approximately $41,000, the Tribunal was then required to determine the amount of the individual site fee increases payable by the permanent residents. The Tribunal followed the methodology of the Nicholls report by apportioning the sum of $41,000 between the permanent residents on the one hand and the annuals on the other hand. Once that apportionment had occurred the Tribunal was in a position to make the orders permitted under s 73 of the Land Lease Act. Section 73 permits the Tribunal to make an order declaring that an increase in site fees is excessive (which the Tribunal did), and make an order reducing the increase by a specified amount (which the Tribunal did).
As stated above in undertaking the task of apportionment, the Tribunal followed the methodology in the Nicholl's Report. That attributed to the permanent residents an obligation to pay a proportion of the $41,000 having regard to their numbers (19) as a proportion of the other occupied sites (104 sites occupied by annuals) but weighted adversely to the permanent residents by reason of the fact that they were able to use the facilities in the community 365 days per year whereas the annuals were restricted to 180 days per year.
The Land Lease Act provides in s 74 that the Tribunal may have regard to certain factors when deciding to make one or more of the orders described above under s 73. A factor relevant to this appeal is contained in s 74(1)(j) which states that the Tribunal may have regard to whether the increase is fair and equitable in the operation of the community.
In our view, the Tribunal was entitled to accept the methodology adopted in the Nicholl's Report on the basis that that was fair and equitable. The fact that the Tribunal did so (with the modification as to the number of occupied sites ) does not constitute an error of law and does not, in our view, give rise to a leave ground under clause 12 referred to above. The modification was that the Tribunal had regard to the number of sites occupied by annuals which was 104.
The resident's submission that that the Tribunal should have apportioned the increase of $41,000 by reference to the total number of sites (160) in the community has two objections to it as follows: 1. There is no specific requirement in the Land Lease Act to this effect. Rather the Tribunal is obliged to take into account the factors set out in s 74 including whether the increase is fair and equitable in the operation of the community. 2. To apportion the share of the permanent residents by reference to the full number of licensed sites would only give a full reimbursement of the amount of the increase in expenses to the operator in circumstances where the community was fully occupied for every day of the year. Where the number of annuals was less than 120 during a 12 month period and where the number of campers was less than 21 in a 12 month period the resulting apportionment would mean that the operator would be left to attempt to recover a portion of the increase from the annuals and /or campers who would indirectly subsidise the vacant sites.
In addition, in relation to the other submissions of the resident: 1. There is no requirement in the Act to have specific regard to whether particular occupants or class of occupants do not use a particular facility and therefore the submission by the resident that they should not have to pay for certain common facilities because they do not use them is not a requirement set out in the Act. In this case there was no evidence (as opposed to submissions from Mr Griffiths) that the permanent residents did not use the common facilities at all. 2. Our review of the parts of the transcript brought to our attention by the operator reveal that at the hearing the Tribunal did discuss the method of apportionment by reference to the Nicholl's approach. In our view it was relatively clear that that process would possibly be adopted by the Tribunal. It would be inaccurate, in our view, to say that Mr Griffiths and the permanent residents were not on notice that if they were to disagree with that approach they should have made a submission to that effect as it was clearly considered by the Member at the hearing and was clearly the basis for the operator's calculation as is evidenced in the Nicholl's Report. The suggestion of procedural unfairness is rejected. 3. We reject the submission that the Nicholls report should not have been relied upon as it did not comply with the tribunal's code of conduct for expert evidence. That report did no more than provide mathematical calculations based upon the number of occupied sites weighted to have regard to the unlimited annual usage available to the permanents and the 180 day annual cap imposed upon the annuals. It was not, in our view, expert opinion evidence, and was evidence that an employee of the operator could have given. In our view that report was not tainted by reason of alleged non-compliance with the code of conduct. 4. We do not accept that the Sunrise Property decision is authority for the proposition that expenses should be apportioned amongst all available sites. That may have been the methodology used in that case but the decision does not reveal that it was a matter in issue requiring a decision of the tribunal.
At the hearing of the appeal we raised the possibility that a simple method of apportionment of the increase of $41,000 would be to calculate that increase as a percentage of the previous year's expenses and outgoings and to apply that percentage to the site fees payable by the permanent residents. In other words, the sum of $41,000 is an increase of 16% on the expenses of the operator incurred the year before the increase and one could increase the permanent residents' site fees by 16%. Neither side argued for that position and therefore we have not taken it any further.
The Decision does not reveal any error of law or the presence of a leave ground. For the above reasons our decision is that the appeal must be dismissed and the decision of the Tribunal at first instance affirmed. Orders to that effect are made.

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: 19 February 2020

At a glance

Court

Decision date

Source

Judgment (6 paragraphs)

Parties

Cases Cited (1)