Hometown Australia Lennox Pty Limited v Debra Bullivant

Statutory basis of the appeal

1. Section 80 (2) of the NCAT Act provides that an internal appeal may be made as of right to the Appeal Panel on a question of law and otherwise with the leave of the Appeal Panel.
2. The Appeal Panel relevantly may make such orders as it considers appropriate in light of its decision on the appeal, including but not limited to any one or more of orders that the appeal is to be allowed, the decision under appeal is to be varied, and the whole or any part of the case is to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel: s 81(1)(a), (b) and (e) of the NCAT Act.
3. An appeal to the Appeal Panel does not simply provide a losing party in the Tribunal below with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. To succeed in an appeal, an appellant must demonstrate either an error on a question of law, which, except in an appeal from an interlocutory decision, may be argued as of right; or that permission leave to appeal should be granted to bring the appeal: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80(2).

The notice of appeal

1. By notice of appeal dated 6 January 2021, Hometown contends that the Tribunal erred in finding that: 1. Part 10 of the Act applies to the sale of the home by an operator; 2. A "home owned" is a home that was, at any stage, previously owned by a homeowner, within the meaning of s 104(1) of the Act; 3. section 109 of the Act applies to the sale of a home by an operator; and 4. asserts that the Tribunal ought to have found that Part 10 and/or s 109 of the Act does not apply to the sale of homes by an operator and, accordingly, ought to have dismissed the application.
2. The appeal raises issues of law which Hometown is entitled to argue as of right.
3. By her reply to appeal, filed 25 January 2022, Ms Bullivant contends that the orders of the Tribunal are supported, should be upheld and that it did not err in law or in fact in finding that Hometown was subject to the provisions of Part 10 of the Act.

The issue

1. The primary issue raised by the appeal is whether, upon the proper construction of Part 10 of the Act, the provisions of s 109 apply to the sale of the home on site 4 by Hometown, as operator, to Ms Bullivant. It can only relevantly apply in the circumstances if Hometown was a "home owner" within the meaning of that term in the Act at the time that it sold the home at site 4 to Ms Bullivant.

Hometown's Submissions

1. Hometown submits that the primary member erred in construing the Act, in summary, for the following principal reasons: 1. he did not have sufficient regard to the relevant statutory text, in particular, s 109(6)(a) which makes clear that the section applies only where it is a home owner who "is selling" the home to a prospective homeowner, together with other textual indicators within Part 10 supporting that construction; 2. he failed to identify the relevant statutory purpose being achieved by Part 10, which is to facilitate a sale by one home owner to another, and is not concerned with the sale of a home by the operator of community to a prospective home owner; and 3. he placed undue weight on a concern that such a construction might permit operators to avoid "a significant control on the level of rent", when in fact control of site fees is not the primary concern of s 109.

Ms Bullivant's Submissions

1. Ms Bullivant submits, in summary, that: 1. the Tribunal correctly determined that Part 10, including s 109, applied when she purchased the home, however, that it is not necessary to read words into sub-paragraph (a) of the definition of "home owner" in s 4 of the Act to reach the conclusion achieved by the primary member; 2. Hometown was the "successor in title" to the previous home owner of the home on site 4, falling within the definition "home owner" in s 4(a) of the Act; 3. when Hometown acquired the home on site 4, the vendor was a "home owner" within the meaning of s 4(a) of the Act as that vendor owned a home on a residential site in a community that was the subject of a site agreement; 4. Hometown became of the "successor in title" of the previous owner of the home because, on purchase, it succeeded to the ownership of the home; 5. the term "successor in title" is not a term of art and connotes no more than a person who holds title after another (Gardez Nominees Pty Ltd v NSW Self Insurance Corporation [2016] NSWSC 532, per Hammerschlag J at [50]). In the context of the Act, there is no reason to depart from the ordinary meaning of "successor in title". The home on site 4 is a chattel. Until 4 November 2020, title to that chattel was with the previous owner. On 4 November 2020, Hometown acquired that title; 6. this meaning of "successor in title" accords with an interpretation of the Act, which advances its purpose, guards against avoidance of key protections for home owners and prospective home owners given by the Act and promotes cohesion and consistency in the site fees charged for similar sites; and 7. accordingly, Ms Bullivant submits that the correct construction of the definition of "home owner" and, consequently, s 104 of the Act is that at the time of the proposed sale and sale of the home on site 4 to her, Hometown was the home owner of the home on site 4.
2. During oral submissions, Mr Batley, of counsel, for Ms Bullivant conceded that there were errors in construction evident in paragraphs [25], [27] and [28] of the primary member's decision but he maintained that the decision was correct for the reasons articulated in the preceding paragraph. The determinations which Mr Batley conceded were attended by errors in construction were critical to the primary member's findings.

Relevant Provisions of the Act

1. The objects of the Act are set out in s 3: 3 Objects of the Act The objects of this Act are as follows - (a) to improve the governance of residential communities, (b) to set out particular rights and obligations of operators of residential communities and home owners in residential communities, (c) to enable prospective home owners to make informed choices, (d) to establish procedures for resolving disputes between operators and home owners, (e) to protect home owners from bullying, intimidation and unfair business practices, (f) to encourage continued growth and viability of residential communities in the State.
2. Section 4 of the Act contains the following relevant definitions: community or residential community means an area of land that comprises or includes sites on which homes are, or can be, placed, installed or erected for use as residences by individuals, being land that is occupied or made available for occupation by those individuals under an agreement or arrangement in the nature of a tenancy, and includes any common areas made available for use by those individuals under that agreement or arrangement. home means - (a) any caravan or other ban or other portable device (whether on wheels or not) other than a tent, used for human habitation, or (b) a manufactured home as defined in the Local Government Act 1993, or (c) any conveyance, structure or thing of a class or description prescribed by the regulations for the purposes of this definition. home owner means - (a) a person who owns a home on a residential site in a community that is the subject of a site agreement (whether or not the person resides at the site), or (b) a person who obtains an interest in a site agreement as the personal representative, or a beneficiary of the estate, of a deceased individual who, immediately before the individual's death, was a person mentioned in paragraph (a), or (c) another successor in title of a person mentioned in paragraph (a), but does not include any person, or any person of a class, excluded from this definition by the regulations. operator of a community means a person who is - (a) the person who manages, controls or otherwise operates the community, including by granting rights of occupancy under site agreements or tenancy agreements, whether or not the person is an owner of the community, or (b) the personal representative, or a beneficiary of the estate, of a deceased individual who, immediately before the individual's death, was a person mentioned in paragraph (a), or (c) a mortgagee in possession of a community for which site agreements are in force, or (d) another successor in title of a person mentioned in paragraph (a), other than a person, or person of a class, excluded from this definition by the regulations. prospective home owner means a person who indicates (or on whose behalf it is indicated) to the operator of a community that he or she is (or might be) interested in becoming a home owner in the community. residential site means a site in a community for a home that is used, or is intended to be used, as a residence by an individual. site agreement means an agreement under which the operator of a community grants to another person for value a right of occupation of a residential site in the community. site fees means money paid or payable by a home owner to an operator on a periodic basis for occupation of a residential site under a site agreement.
3. Part 10 of the Act is headed "Sale of Homes" and s 104 of the Act addresses the application of Part 10. Section 104 of the Act is on the following terms: 104 Application of this Part (1) This Part applies to a home owned by a home owner or former home owner that is located on a residential site in a community. Accordingly, references in this Part to a home owner include former home owners. Note: The definition of home owner in section 4 provides that the term includes an executor, administrator or beneficiary of the estate of a deceased home owner. (2) Nothing in this Part applies to the sale of a home that is not located in a community.
4. Part 10, Division 2 of the Act is headed "Rights and obligations regarding the sale of homes" and includes s 109 of the Act which is in the following terms: 109 Operator to enter new site agreement (1) This section applies if a purchaser or prospective home owner under a contract, or proposed contract, for the sale of the home (the sale contract) requests the operator of the community to enter into a new site agreement (the new site agreement) for the residential site with the purchaser or prospective home owner. Note - This section is not relevant if the purchaser or prospective home owner intends to remove the home from the community. (2) The operator must enter into the new site agreement after the request is made, unless - (a) the operator declines to enter into the agreement and does so on reasonable grounds (including, for example, the ground that it appears reasonably unlikely that the sale contract will be entered into), or (b) without limiting paragraph (a), the operator and the purchaser or prospective home owner do not agree on the terms of the proposed agreement. (3) If the sale contract is entered into before the new site agreement is entered into - (a) the contract may include a term to the effect that the contract is subject to the new site agreement being entered into within a specified period after the contract is entered into, and (b) the contract is unenforceable if it includes that term and the new site agreement is not entered into within that period. (4) If the new site agreement is entered into before the sale contract is entered into - (a) the agreement may include a term to the effect that the agreement is subject to the sale contract being entered into within a specified period after the agreement is entered into, and (b) the agreement is unenforceable if it includes that term and the sale contract is not entered into within that period. (5) The site fees under the new site agreement must not exceed fair market value. (6) Fair market value is the higher of the following - (a) the site fees currently payable by the home owner who is selling the home, (b) the site fees currently payable for residential sites of a similar size and location within the community. (7) The operator must not unreasonably delay or refuse to enter into a new site agreement referred to in subsection (2).

Principles of Statutory Construction

1. The principles of statutory construction are well-known and understood. They have been considered repeatedly by the High Court of Australia and by intermediate appellate courts. For example, in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, the plurality of the High Court of Australia said (at 78) that: [T]he duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.
2. The principles have also been more recently and helpfully summarised by the Full Court of the Federal Court of Australia in Glencore Coal Assets Australia Pty Ltd v Australian Competition Tribunal (2020) 280 FCR 194 (at [239]) in which the Court emphasised that the task of statutory construction is to ascertain the contextual meaning of the words; with the starting point, being the text, whilst, at the same time, there is to be regard to context and purpose.

Was Hometown a "home owner" when it sold site 4 to Ms Bullivant?

1. The text of s 104 of the Act makes plain that Division 10 which includes s 109 "applies to a home owned by a home owner or former home owner that is located on a residential site in a community."
2. "Former home owner" is not defined in either s 4 or any other provision of the Act. In the absence of any indication to the contrary, "former home owner" should be afforded its ordinary grammatical meaning; that is, as a reference to a person who was a previous or prior "home owner" as that term is defined in s 4 of the Act.
3. Hometown can only be a "home owner" for the purposes of the application of Division 10 of the Act if, in the context of the sale of the home on site 4 to Ms Bullivant, it responds to either of the three alternate definitions of that term in s 4 of the Act. For the reasons that follow, we find that Hometown was not a "home owner" and that, accordingly, the provisions of s 109 of the Act do not apply to it in the circumstances under consideration.
4. The parties accept, and it is the case, that whilst Hometown owned the home at the site 4 of the community which it sold to Ms Bullivant, the home was not at that time "the subject of a site agreement" and hence sub-paragraph 4(a) of the definition of "home owner" is not satisfied. Neither party contended that sub-paragraph 4(b) of the definition of "home owner" is of any application nor do the objective facts warrant any further consideration of this issue.
5. The thrust of Ms Bullivant's submissions were that Hometown was a "home owner" because it satisfied the definition in sub-paragraph 4(c) of the Act. She contended that Hometown acquired the home on site 4 from a vendor who was a "home owner" within the meaning of sub-paragraph 4(a) of the Act as that vendor owned a home on a residential site in a community that was the subject of a site agreement. Ms Bullivant further contended that Hometown became the "successor in title" of the previous owner of the home because, on purchase, it succeeded to the ownership of the home.
6. The difficulty with Ms Bullivant's argument is that it focuses on succession of home ownership (emphasis added) and, in doing so, ignores the mandatory directive in sub-paragraph 4(c) of the Act that the "successor in title" must be "of a person mentioned in paragraph (a)". In other words, to qualify as a relevant "successor in title" for the purposes of the definition of "home owner" in s 4 of the Act, the successor must be of "a person who owns a home on a residential site in a community that is the subject of a site agreement…"
7. Hometown does not satisfy that definition because whilst it owned the home on site 4, it was not at the time of sale the subject of a site agreement.
8. Such a construction is first, not inconsistent with any of the objectives of the Act as enumerated in s 3 of the Act and, secondly, is wholly consistent with the evident purpose and object of Part 10 generally and with s 109 of the Act more particularly.
9. Part 10 of the Act is concerned with the sale of homes in a community the subject of the Act and, as s 104 pellucidly states, Part 10 applies to a "home" owned by a "home owner" or "former home owner" that is located on a residential site in a community.
10. The object and purpose of Part 10, as explained in the Second Reading Speech of the Residential (Land Lease) Communities Bill 2013, 12 November 2013, was to provide "a simpler and more effective process for home owners wishing to sell their homes on site." Those homes are, as the definition of "home owner" makes plain, the subject of site agreements with operators.
11. Consistent with that object, s 109 of the Act seeks to facilitate the sale of a home by a home owner, by providing a safeguard in relation to the site fees which an operator is permitted to charge in relation to a new site agreement that a purchaser or a prospective purchaser requests an operator to enter into. It does so by providing that the site fees for the new site agreement "must not exceed fair market value" (s 109(5)). It also prescribes a mechanism to determine fair market value (s 109(6)).
12. Hometown was accordingly not a "home owner" for the purposes of Part 10 of the Act when it sold the home on site 4 to Ms Bullivant because whilst it owned the home on site 4, it was not at the time of sale the subject of a site agreement and was thus not subject to the provisions of s 109.
13. We are of the view that the appeal must be upheld. The Tribunal's erroneous application of the law relating to the definition of home owner gave rise to a question of law. It follows the appellant had a right to appeal on that point without the need to seek leave to appeal.
14. We are conscious that our decision highlights a potential anomaly in the application of the safeguards in, for example, s 109 of the Act. That is, that those provisions do not apply when the vendor of a home in a community is the operator itself with the consequence that an operator is not subject to the same restrictions in setting site fees for a new site agreement as it would be if requested by a purchaser or prospective purchaser from an owner who is not also the operator. It is for the legislature to consider if there be an anomaly and, if so, whether and in what manner it may need to be addressed by legislative amendment.

Orders

1. The orders are as follows: 1. The appeal is allowed. 2. Orders 2 and 3 made on 23 December 2021 are set aside. 3. Application RC 21/33414 is otherwise dismissed.

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: 17 May 2022