Kincumber Nautical Village Pty Ltd v Morris

NCAT Appeal Panel|2020-12-10

Introduction

This decision concerns whether questions raised on appeal should be referred to the Supreme Court under s 54 of the Civil & Administrative Tribunal Act (the NCAT act). Section 54 provides: 54 REFERENCES OF QUESTIONS OF LAW TO SUPREME COURT (1) The Tribunal (including when constituted as an Appeal Panel) may, of its own motion or at the request of a party, refer a question of law arising in the proceedings to the Supreme Court for the opinion of the Court. (2) The Tribunal may refer a question of law under this section only if the President has consented in writing to the question being referred. (3) The Supreme Court has jurisdiction to hear and determine any question of law referred to it under this section, but may decline to exercise that jurisdiction if it considers it appropriate to do so. (4) If a question of law arising in proceedings has been referred to the Supreme Court under this section, the Tribunal is not - (a) to give a decision in the proceedings to which the question is relevant while the reference is pending, or (b) to proceed in a manner, or make a decision, that is inconsistent with the opinion of the Supreme Court on the question. (5) Subsection (4) extends to the Tribunal when constituted as an Appeal Panel that is determining an internal appeal from a decision of the Tribunal in proceedings before which a question of law has been referred by the Tribunal at first instance to the Supreme Court under this section.
The Appellant lodged an appeal on 16 September 2020 following a decision made in the Consumer & Commercial Division of the Tribunal published on 3 September 2020.
The appeal was listed for call-over and directions on 9 October 2020 at which the Appeal Panel made directions to the following effect: 1. Leave is given to the Appellant to be legally represented on the condition that the Appellant does not seek costs of the appeal. 2. Leave is given to the Respondent to be represented by Mr R Morris and leave is also given to the Respondents to be legally represented, if they wish. 3. The parties should file and serve evidence and submissions in support of and in opposition to the Appellant's application for the questions of law to be referred to the Supreme Court. 4. Subject to any further order the referral application is to be determined on the papers. ( No further order has been sought or made).

Decision under Appeal

The dispute between the parties concerns site fee increases in a residential community regulated by the Residential (Land Lease) Communities Act 2013 (RLLC Act). The Applicants at first instance are residents in the residential community owned and operated by the Appellant (the Respondent at first instance). The decision under appeal (the Decision) records that each of the agreements to which the Respondents and the Appellant were parties contained a provision by which site fees could be increased by a method which was described under the heading "Fixed Method".
In the Decision, the Tribunal recorded that s 65 of the RLLC Act deals with site fee increases pursuant to a fixed method. The Tribunal found that the notices sent to the Respondents evidenced a form of increase in site fees which the Tribunal found not to be pursuant to a fixed method, but rather by a method which the Tribunal described as "more than one fixed method" [15] and the Tribunal held that that method fell "foul of s 66(2)" of the RLLC Act. Section 66(2) provides that a site agreement must not provide that the site fees may be increased by more than one fixed method and if more than one method is specified, the method that results in the lower or lowest increase of site fees is the applicable method.
The Tribunal made two orders. The first was an order that pursuant to s 157(1)(a) of the RLLC Act the Appellant must not breach that Act by applying more than one fixed method in increasing site fees. The second order was that pursuant to s 157(1)(b) the Appellant must comply with s 66 of the RLLC Act and must apply the fixed method which produces the lower or lowest increase in site fees.

The Questions which the Appellant seeks to have referred to the Supreme Court

The Appellant's submissions (filed and serve pursuant to the directions made at call-over) identify four questions to be referred to the Supreme Court for the opinion of that court. They are: 1. Is the method of increasing site fees contained in the site agreements the subject of the first instance decision (the Site Agreements) a "fixed method" within the meaning of ss 65 and 66 of the RLLC Act? 2. Does s 66(7) of the RLLC Act preclude the Respondents from challenging, under the RLLC Act, the terms of the Site Agreements that fix the method of future increases of site fees? 3. Did the Tribunal err, as a matter of law, in the first instance decision by taking into account the site fee increase notices issued under the Site Agreements in construing the operation of ss 66(7)) of the RLLC Act? 4. Is the portion of the site fee increase term, in the Site Agreements, which provides for an increase on the basis of "the effect of any change in the rate of GST or similar tax that is included in the site fees" uncertain as a matter of law?
Sections 65 and 66 of RLLC Act provide as follows: 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 (for example, in proportion to variations in the Consumer Price Index or in the age pension), (b) by notice (otherwise than by a fixed method). 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. (8) A fixed method of increase may-- (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.

The Appellant's Evidence and Submissions in Support of the Application for Referral

The Appellant has filed and served two affidavits (dated 7 and 30 October 2020) of Emily Ann Brownlee, a senior associate at the firm engaged by the Appellant. No objection or submission was received from the Respondents concerning the content of these two affidavits. The affidavits may be summarised as follows:

Affidavit of 7 October 2020 1. The affidavit records that Ms Brownlee has spoken with Mr Robert Browne (whose background credentials and experience are set out in the affidavit). He is a person described as familiar with standard terms of Site Agreements currently used in land lease living arrangements across New South Wales. His view is that the site agreement in dispute between the parties contains a mechanism for site increases that is common across New South Wales. 2. Ms Brownlee's research indicates that having researched for prior judicial guidance her research reveals that there is limited judicial guidance with respect to s66(2) and (7) the RLLC Act.

Affidavit of 30 October 2020

This affidavit (which was in reply to the Respondent's affidavit) states that on her instructions the Appellant will agree not to seek its costs of the referral from the Respondents in the Supreme Court, subject to the Respondents likewise agreeing not to seek their costs of the referral. In response to Mr Morris' affidavit (described later) Mr Robert Browne said that the Tenants' Union has previously supported tenants' groups.

The Appellant's Submissions

The Appellant's submissions describe the following discretionary grounds warranting referral: 1. The Appellant will agree not to seek any order for costs of the Supreme Court proceedings subject to the Respondents confirming that they likewise agree not to seek their costs of those proceedings. 2. The appeal raises questions of public interest and there is a public policy benefit in having the questions raised determined authoritatively. The substantial question of law in dispute is the proper construction of the RLLC Act and interplay between the relevant subsections in s 66. The formula used in the Site Agreements, the subject of this dispute, is widely deployed in Site Agreements across New South Wales. 3. A decision of the Supreme Court on the questions of statutory construction raised by the Appellant will provide certainty to the "land lease living industry as a whole". The questions of law the Appellant raises have been the subject of limited judicial guidance. 4. In the event that the issues raised on appeal are determined by the Appeal Panel of the Tribunal and the appeal is dismissed, the Appellant intends to appeal to the Supreme Court or the Court of Appeal as appropriate. The Tribunal ought to give weight to the dispute having already reached the internal appeal stage with the consequence that the requested referral will mitigate the likelihood of a further appeal to a costs jurisdiction. 5. The referral is in line with the guiding principle in s 36(1) of the NCAT Act to resolve disputes quickly. The questions of law have been articulated with precision and there are no relevant facts in dispute. 6. The questions of law are material to the appeal and encompass the entirety of the issues on appeal. If questions (1) or (2) are answered in the affirmative, the Decision will be overturned. 7. The Appellant has requested the referral in a timely fashion.

Respondents' Submissions and Evidence in Opposition

One of the Respondents, Robert Morris, has filed an affidavit dated 23 October 2020. No objection or submissions were made by the Appellant with respect to that affidavit. Mr Morris is a retired teacher and describes himself as the "lead Respondent and also the advocate for the other 51 co-Respondents". His affidavit expresses concern that if the dispute is referred to the Supreme Court the Respondents would be potentially exposed to a costs order. The Respondents are in the main all aged pensioners. His submissions also attach a notice sent by the Appellant to the Respondents dated 4 November 2020. The tenor of that notice referred to an agreement to temporarily reduce site fees in the period commencing November 2018 which was set to expire on 4 November 2020. The notice advised that the Appellant proposed to again extend the period of the "temporary reduction" until 27 January 2021. Further, the notice stated that the site fees specified in the November 2018 "increase notice" will apply from 28 January 2021.
The Respondents are not legally represented nor are they in receipt of a grant of legal aid. In other respects his affidavit may be summarised as follows: 1. The questions to be raised are of public interest but are ones which often arise in the Tribunal and can be determined authoritatively by the Appeal Panel. 2. The Appeal Panel might include the President of the Tribunal, or a judge of the Supreme Court. If so, any appeal from a decision of the Appeal Panel will be to the Court of Appeal. 3. The guiding principle contained in s 36 of the NCAT act points to the Tribunal refusing the application.
The Respondents' submissions oppose the referral and, to some extent, repeat what is contained in Mr Morris' affidavit but additional points may be summarised as follows: 1. Significant delay may arise from any referral to the Supreme Court. The Court may decline to exercise jurisdiction if it considers it appropriate to do so. 2. Based upon advice received from the Tenants Union of NSW the number of homeowners in residential land lease communities who are on agreements that increase site fees by a fixed method comprise a small percentage of the overall number of homeowners in such communities. The majority have agreements which increase site fees by notice rather than by a fixed method. 3. The Respondents do not consent to "waiving their right to seek their own legal costs should the appeal be referred by the Appeal Panel to the Supreme Court".

Consideration

Section 54 of the NCAT Act provides that the Tribunal "may" refer a question of law to the Supreme Court and only if the President has consented in writing. The decision is therefore discretionary. In this case the question concern matters of statutory construction of the RLLC Act.
In my view it is clear from the provisions of the RLLC Act that Parliament intended that disputes between operators and residents regulated in their arrangements by that Act would preferably be determined by the Tribunal. Indeed, the Tribunal receives many applications each year for consideration by members of communities or operators requiring the Tribunal to exercise its jurisdiction under the RLLC Act. Section 156 of the RLLC Act provides that a homeowner, former homeowner or operator may apply to the Tribunal for determination of (inter alia) a dispute arising from or relating to a site agreement. Section 157 deals with orders that may be made by the Tribunal. These include an order that restrains an action in breach of the Act or a site agreement. In addition, s 68 provides that a homeowner 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 the requirement of "this Division" ie. Part 6 Division 3 which concerns "Increase of site fees".
In the Appellant's application, the Appellant referred to the decision of the Appeal Panel in Independent Liquor & Gaming Authority v Auld [2018] NSWCATAP 68. That case cites the relevant principles to be considered when determining an application for referral and also refers to other decisions of the Tribunal where those principles have been articulated.
The Appellant's request for referral boils down to two key considerations. They are for a decision which is authoritative and for an opportunity to appeal directly to the Court of Appeal without an intermediate step of having to appeal to a single judge of the Supreme Court from the Appeal Panel's decision.
In my view in the circumstances of this matter these two considerations are insufficient to make it appropriate to make the referral as requested. Those circumstances are that it appears that there are no decisions of appeal panels on the questions raised and that therefore this is not a case where there are conflicting decisions of appeal panels creating a need for clarification of the law from a superior court .A further relevant circumstance is the intention of Parliament referred to above to the effect that most disputes under the RLLC Act should be resolved in the tribunal (subject to the appeal rights from the tribunal).
The Appellant's submissions, if accepted, might lead to the conclusion that where a party to an appeal in the tribunal foreshadows appealing from an adverse decision to the Court of Appeal, the tribunal should acquiesce in the referral. To agree to the referral for that reason would also appear to be inconsistent with the apparent intention of Parliament referred to earlier.
The Appellant's concerns could be addressed by the Appeal Panel being presided over by the President of the Tribunal (who, as the Respondents have noted, is a justice of the Supreme Court). If the President is not available another member who is a judge may preside and the decision from that panel will also be one requiring an appeal to go straight to the Court of Appeal (see s48 of the Supreme Court Act 1970 ) . However, having regard to the consideration referred to earlier ( namely this is not a case where there are conflicting decisions of the appeal panel) it is not appropriate for the tribunal to restrict the constitution of the appeal panel in this appeal in a manner which is intended to satisfy the Appellant's potential desire to be able to go straight to the Court of Appeal.
In my view the conditional offer of the Appellant not to seek costs incurred in the Supreme Court proceedings still leaves open the possibility that the Respondents will be burdened by the risk of a costs order given that they have not indicated that they accept the Appellant's offer. This is to be compared with the position concerning costs in the tribunal, where generally each party pays its own costs ( s60 of the NCAT Act), subject to special circumstances ( s60(2)).
A further burden for the Respondents is the greater level of formality which will be a feature of the proposed proceedings in the Supreme Court. The Tribunal is required by the NCAT Act to facilitate the just, quick and cheap resolution of the real issues in proceedings (see s 36). The Tribunal is also required to act with "as little formality as the circumstances of the case permit" (s 38(4)). It is likely in my view that the Respondents( who are not represented by lawyers) will be less burdened by the issues which the Appellant has raised being prosecuted within the Tribunal than would be the case were those issues for determination in the Supreme Court.
A further consideration is that the notice dated 4 November 2020 attached to the Respondents' submissions would appear to constitute a proposal by the Appellant to increase fees from next January which may not necessarily be in conformity with the existing order of the Tribunal which is to apply the method which produces the lower or lowest increase in site fees. It may be the case that the Respondents will seek an order for a temporary stay on the proposed increase foreshadowed by the Appellant. That prospect would suggest that it would be more conducive to the efficient resolution of the dispute between the parties for the appeal to remain within the Tribunal rather than for the appeal to remain in abeyance while the referral to the questions of law is determined, particularly in circumstances where there is at least the possibility of an application within the Tribunal for an interim order.
It is relevant that if the appeal proceeds within the Tribunal then in the ordinary course the appeal would be listed for a call-over at which the parties would be given directions and a hearing date for the appeal. Those directions would typically involve the parties filing submissions in sequence over an eight week period (three weeks for the Appellant, three weeks for the Respondent and a further two weeks for the Appellant's submissions in reply) and for an appeal hearing date to be granted shortly thereafter. In the ordinary course that would suggest that this appeal could be heard in March or April 2021. No information has been provided to me as to the course the proceedings would take in the Supreme Court.
For all the above reasons I decline to exercise the discretion contained in s 54 and I refuse the application for referral.
I make the following directions: 1. The Respondents are to file and serve a Reply to Appeal on or before 18 December 2020. 2. The appeal is listed for call-over and directions on 21 December 2020 at 10am.

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: 10 December 2020

Administrative Tribunal Act 2013(NSW)

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