Sakkara Investment Holdings Pty Ltd as trustee for Sakkara Landings Trust v The Residents Committee of The Landings Retirement Village

Earlier proceedings

1. Sakkara filed an application in proceedings RV11/29123 in the CTTT on 3 June 2011, seeking an order to vary proposed recurrent charges for the financial year 2011-2012 (FY12), under s 108 of the RV Act, and an order in respect of the expenditure in the proposed budget for that year, under s 115. Sakkara and the Residents Committee each filed a subsequent application in the CTTT (proceedings RV12/32770 and RV12/12787), seeking orders relating to the appointment of an assessor, expenditure, variation of recurrent charges and the distribution of the Capital Works Fund and other orders under the RV Act for FY12 and FY13. These three proceedings were heard together by Mr Bordon, Senior Member, between 26 and 28 November 2012. Reasons for decision were given on 19 April 2013 and orders were made on 14 June 2013 (the CTTT Orders). These orders did not include a determination of the recurrent charges or the budgeted expenditure for either FY12 or FY13 but rather the relevant orders were as follows: "22. The Tribunal will not finally dispose of these 12/13 budget issues until such time as the parties can either agree on its form or either party re-lists the matter for further submission in relation to any adjusted recurrent charges. … 26. The Tribunal will not finally dispose of these 10/11 and 11/12 budget issues until such time as the parties can hold discussions in relation to these audited accounts [referred to in the preceding order] so as to agree on the correct accounting baseline for future budgets or either party re-lists the matter for further submission in relation to any outstanding issues which arise."
2. As a result, during FY12 and FY13 the recurrent charges were not set by the Tribunal nor was there a budget determined by the Tribunal during either of those two financial years. Nonetheless, amounts had to be collected from residents in order to fund the expenditure that had to be incurred in running the village during those years. The position for FY12 and FY13 was eventually determined by the Tribunal, along with other matters, in November 2014. Orders 4, 5 and 6 made on 3 September 2015 relate to those issues.
3. On 12 July 2013, Sakkara filed an appeal in the District Court, under s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (the CTTT Act), against a number of the CTTT Orders.
4. On 20 December 2013, Sakkara commenced proceedings, out of time, seeking judicial review of a more limited number of the CTTT Orders in the Supreme Court.
5. Sakkara discontinued its District Court appeal on 18 February 2014.
6. In the Supreme Court proceedings, Sackar J refused to extend time in which to apply for judicial review and dismissed the summons for judicial review with costs on 19 May 2014: Sakkara Investment Holdings Pty Ltd as trustee for Sakkara Landings Trust v The Residents Committee, The Landings and the Consumer Trader and Tenancy Tribunal of New South Wales [2014] NSWSC 610 at [58]-[59].
7. In the meantime, the parties had commenced further proceedings in the CTTT, namely proceedings RV13/65453, being a renewal of proceedings RV12/12787 under s 43 of the CTTT Act, proceedings RV13/65436 and proceedings RV13/65446.
8. On 1 January 2014 the CTTT was abolished and this Tribunal came into existence. As a result of the operation of Div 3 of Pt 1 of Sch 1 to the Civil and Administrative Tribunal Act 2013 (NSW) (the Act), this Tribunal was empowered to continue to hear and determine the proceedings previously commenced in the CTTT. Further proceedings concerning The Landings, proceedings RV14/14827, were also commenced in NCAT in 2014.
9. In early February 2014 (the reference to September 2014 in [60] of the reasons for decision of the Tribunal below is an obvious error), Sakkara sought the residents' agreement both to an amended budget for the financial year ending 30 June 2014 (FY14) to take account of an anticipated increase of $61,354 "primarily caused by increases in utility and statutory charges" and to a correspondingly varied recurrent charge for FY14 of $513.30 per month per resident. Resolutions agreeing to these changes were passed by the residents on 27 February 2014.
10. On 18 and 20 August 2014, Senior Member Bordon conducted a hearing dealing with all outstanding matters raised in proceedings RV11/29123, RV12/32770, RV13/65436, RV13/65446, RV13/65453 and RV14/14827. He also received written submissions by both parties between 5 September and 10 October 2014.
11. On 31 October 2014, audited accounts in respect of The Landings for FY14 were produced. These disclosed a deficit of income over actual expenditure for that financial year of $111,914. In addition, based on these accounts the residents formed the view that a comparison of the amended budget for utility and statutory charges for FY14, agreed to in February 2014, with the actual payments recorded in these accounts demonstrated that there was an "overprovision" in relation to those charges of $29,815. This figure divided among the 220 persons liable to pay recurrent charges represented $135.52 per person. Order 2 made on 3 September 2015 relates to this issue.
12. On 14 November 2014, Senior Member Bordon made orders accompanied by written reasons for decision (the November 2014 Orders). The November 2014 Orders were quite extensive and relevantly included the following: "59. In proceedings RV 11/2923 in relation to the proposed budget for the financial year 2012 the following orders will be made:- (a) Pursuant to section 108 an order that the recurrent charges be the monthly levy of $574.40. (b) Pursuant to section 115 the Tribunal's approved budget be in the form of expenditure for a total amount of $1,325,721 in the form annexed as Annexure A. (c) The operator is to undertake an audit of the approved budget and accounts for the 2011/2012 financial year in accordance with these orders and earlier CTTT findings and is to fund the cost of this. (d) In the event that the audit identifies any shortfall or deficit in the village accounts the operator is not to carry forward this deficit in future years and is to make good any deficit amount in the village accounts within 7 days following the receipt of the audit report. (e) Notation: The Tribunal notes that the Tribunal ordered budget in Annexure A has had removed from it a line item of painting for pergolas for an amount of $41,747.00 and a dwelling divisor is 192. 60. In proceedings RV 12/32770 in relation to the proposed budgets for the financial year end of 2013 the Tribunal orders: (a) Pursuant to section 108 recurrent charges for the financial year be a monthly levy of $504.23. (b) Pursuant to section 115, the approved budget be in form of expenditure for the financial year for a total $1,246,456 in the form annexed B in the column headed "Budget after CTTT Deductions". (c) That the operator is to undertake an audit by its current auditor of the approved budget and revised accounts for the 2012/2013 financial year within 28 days in accordance with these orders and earlier CTTT findings and the operator is to fund this cost. (d) In the event that the audit identifies any shortfall or deficit in the village budget the operator is not to carry forward this deficit to future years and is to make good any deficit amount in the village accounts within 7 days following the receipt of the audited report. (e) The Tribunal notes that the budget in Annexure B headed contained in the column headed "Budget after CTTT Deductions" has had removed from it a line item of painting for an amount of $104,488.00 as shown in the adjustment for this amount and that the dwelling divisor is 206."

• The Residents Committee, The Landings v Sakkara Investment Holdings Pty Ltd ATF Sakkara Landings Trust [2014] NSWCATCD 228 at [59] and [60].

1. No appeal was lodged against the November 2014 Orders.

Proceedings RV 14/57001

1. Against this background, on 21 November 2014, the Residents Committee lodged another application in the Consumer and Commercial Division (proceedings RV14/57001). This application related primarily to FY14 and sought the following orders: 1. "Refund into Applicants Recurrent Charges bank account to make good deficits of $111,914 incurred during the financial year to 30 June 2014", under s 120C of the RV Act; 2. "Produce a correctly audited Income, Expenditure & Balance Sheet of Sakkara Investment Holdings Pty Ltd atf Sakkara Landings Trust for the year to 30 June 2014", under s 119 of the RV Act; and 3. "Refund to 220 residents an amount of $67,540 incorrectly paid out of Recurrent Charges during the year to 30 June 2014", under s 116(4) of the RV Act.
2. As required by the November 2014 orders, on 16 March 2015, "an audit of the approved budget and accounts for the 2011/2012 financial year" and "an audit by its current auditor of the approved budget and revised accounts for the 2012/2013 financial year" were provided. These audited accounts indicated that, on the basis of the recurrent charges set by Senior Member Bordon in the November 2014 Orders for each of the relevant financial years: 1. At the end of FY12, there was a surplus of income over expenditure of $79,764; 2. At the end of FY13, there was a deficit of income over expenditure of $14,047.
3. As a matter of arithmetic, if the deficit for FY13 were set off against the surplus for FY12, it could be said that there was a "net surplus" for those two years of $65,717 ($79,764 - $14,047). However, for reasons which appear below, this is not permissible.
4. In May 2015, Sakkara issued invoices to those liable to pay recurrent charges in FY12 and FY13 for the difference between the recurrent charges previously invoiced in those years and the recurrent charges set by Senior Member Bordon in the November 2014 Orders for those financial years.
5. When proceedings RV14/57001 were heard on 25 June 2015, they were the only proceedings on foot between the parties. All of the previous proceedings had been finalised by the November 2014 Orders. In his reasons for decision in proceedings RV14/57001, The Residents Committee of the Landings v Sakkara Investment Holdings Pty Ltd T/As Sakkara Landings Trust [2015] NSWCATCD 113, Mr Coleman SC, Senior Member, stated at [12]: "[12] As I have observed, despite the apparent breadth of the Points of Claim document, at the hearing the issues to be determined were distilled into 5 issues. They are (following the order in the applicant's submissions): (1) Re-imbursement of Recurrent Charges used for replacement of capital items; (2) Re-imbursement of Salary of village manager spent on village defect and rectification works and other tasks; (3) Re-imbursement of Recurrent Charges for extra utility expenses in the FY14 amended budget; (4) Provision by [Sakkara] to the [Residents Committee] of a Statement of Financial Position (Balance Sheet) for the FY14; and (5) Make good of accrued deficits in the FY14 accounts."
6. On 3 September 2015, the Senior Member made the following orders in proceedings RV14/57001 (the September 2015 Orders) and gave his reasons for decision: "(1) Order that within 21 days from the date of these orders, [Sakkara] pay into the Village Operating Account the sum of $1,338.00 representing the cost of the purchase of new fly screens. (2) Order that within 21 days of the date of these orders [Sakkara] pay to each of the 220 eligible residents the sum of $135.52.00 by way of refund of overcharged recurrent charges. (3) Order that within 21 days of the date of these orders, [Sakkara] provide to the applicant a statement of financial position (balance sheet) for FY14 the accounts. (4) Order that within 21 days of the date of these orders [Sakkara] have prepared an audited report of the FY14 accounts to take account of the net surplus of $65,717 as disclosed in the final audit reports of the accounts of FY12 and FY 13 dated 16 March 2015 and that [Sakkara] bear the cost of such report and if that report shows a deficit order that within 7 days of receipt of that report, [Sakkara] make good any such deficit. If the report discloses a surplus, the surplus is to be dealt with in accordance with s 120B of the RV Act. (5) Order that [Sakkara] withdraw all invoices issued by it in May 2015 to any resident, past or present, seeking to recover additional recurrent charges as a result of the audit reports of the accounts for FY12 and FY13 dated 16 March 2015 and that [Sakkara] not issue to any other resident any invoice for recurrent charges for those years. (6) Order that within 7 days of the date of these orders [Sakkara] repay to any resident, past or present, any amount paid by such resident purportedly in compliance with any invoice referred to in order 5 above. (7) The application otherwise be dismissed. (8) No order as to costs."

• The Residents Committee of the Landings v Sakkara Investment Holdings Pty Ltd T/As Sakkara Landings Trust [2015] NSWCATCD 113 at [136].

1. On 17 September 2015, Sakkara lodged a notice of appeal challenging order 2 and orders 4 - 6 of the September 2015 Orders. It appears that these are the orders that related to issues (3) and (5) as identified by the Tribunal at first instance, respectively. This is the appeal which is now before the Appeal Panel.

Grounds of Appeal

1. Sakkara's grounds of appeal were identified by reference to the order or orders appealed against. We shall adopt the same approach.

Order 2 of the September 2015 Orders

1. The substance of Sakkara's grounds of appeal in respect of order 2 may be summarised as follows: 1. The erroneous imposition of the onus ground - the Tribunal erred in law by interpreting and applying s 116 of the RV Act, and in particular subs (3A) of that section, so as to impose on Sakkara the onus of proving, if it was to avoid liability for contravention of s 116(3), that the additional amounts approved for utilities but not spent on them was spent as "a variation in expenditure between items in the approved annual budget" (Annexure B to the notice of appeal pars 4 - 11). 2. The onus discharged ground - the Tribunal erred in making the factual finding that Sakkara "led no evidence to … explain on what line items in the varied approved budget those additional charges were spent" when Sakkara had produced the final audited accounts for FY14 prepared by HLB Mann which were "evidence that recurrent charges paid towards the utility costs were used on one or more other line items in the approved budget" (Annexure B to the notice of appeal pars 12 - 17).
2. Having regard to s 80(2)(b) of the Act which deals with appeals to the Appeal Panel in cases such as the present, Sakkara sought leave to appeal in relation to the onus discharged ground on the basis that it was not an appeal on a question of law.

Orders 4, 5 and 6 of the September 2015 Orders

1. The substance of Sakkara's grounds of appeal in respect of orders 4, 5 and 6 may be summarised as follows: 1. The question not before the Tribunal ground - the Tribunal erred in law by making orders 4, 5 and 6 concerning Sakkara's invoicing residents to recover the amounts of recurrent charges, which had been established in the November 2014 Orders and which remained outstanding at May 2015, when the question of whether those amounts could be recovered was not before the Tribunal at first instance in proceedings RV 14/57001 (Annexure B to the notice of appeal par 23(a)). 2. The impermissible treatment of a "net surplus" ground - the Tribunal erred in law by ordering that the "net surplus" for FY12 and FY13 (arising from a deficit in FY12 and a surplus in FY13) be carried forward to FY14, in circumstances where: 1. s 120B of the RV Act permits only the surplus of a single financial year to be carried forward to the subsequent financial year; 2. s 120C requires the operator to make good any deficit in any particular financial year and s 120C(2)(a) prevents an operator from carrying forward a deficit figure except for in the circumstances in cl 33 of the Retirement Villages Regulation 2009 (the RV Regulation); and 3. s 120C gives the right to the residents to determine what is to occur in relation to any surplus in any financial year, 4. (Annexure B to the notice of appeal par 23(b)). 1. The misapprehension concerning the recurrent charges in the FY12 and FY13 accounts ground - the Tribunal erred in making the factual finding that the recurrent charges recorded in the final audited accounts for FYs 12 and 13 prepared by William Buck, as required by the November 2014 Orders, represented amounts that had been actually collected by Sakkara, when in fact: 1. Those recurrent charges were the amount of recurrent charges due and payable for each relevant financial year whether or not they had been collected; and 2. if the uncollected amounts were not collected there would be no surplus in FY12 but a deficit and no "net surplus" at the end of FY13, 3. (Annexure B to the notice of appeal par 25).
2. Sakkara sought leave to appeal, under s 80(2)(b) of the Act, in relation to the misapprehension concerning the recurrent charges in the FY12 and FY13 accounts ground on the basis that it did not involve an appeal on a question of law.
3. The Appeal Panel will deal with the grounds relating to order 2 first and then the grounds relating to orders 4, 5 and 6. Before considering the grounds of appeal, however, it is appropriate to consider the jurisdiction of the Appeal Panel and to make some comments on the legislative scheme of the RV Act, identifying the provisions most relevant to this appeal.

The jurisdiction of the Appeal Panel and Leave to Appeal

1. The RV Act expressly enables the Tribunal to make certain decisions and exercise functions under that Act, see for example s 128 of the RV Act. Proceedings in the Tribunal arising under the RV Act do not fall within the administrative review jurisdiction, the appeal jurisdiction or the enforcement jurisdiction of the Tribunal. Accordingly, proceedings under the RV Act fall within the general jurisdiction of the Tribunal and a decision made in such proceedings will be a "general decision" within the meaning of s 29(3) of the Act, see generally ss 28 - 33 of the Act. By virtue of s 32(1) of the Act, the Tribunal has internal appeal jurisdiction over any decision made in proceedings for a general decision and such a decision is an "internally appealable decision" within the meaning of s 32(4) of the Act.
2. The September 2015 Orders were made under the RV Act in the general jurisdiction of the Tribunal and, thus, they constitute an internally appealable decision for the purposes of the Act.
3. Any party to proceedings for an internally appealable decision may appeal to the Appeal Panel of the Tribunal by operation of s 80 of the Act which provides: "80 Making of internal appeals (1) An appeal against an internally appealable decision may be made to an Appeal Panel by a party to the proceedings in which the decision is made. Note. Internal appeals are required to be heard by the Tribunal constituted as an Appeal Panel. See section 27 (1). (2) Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance - with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds. (3) The Appeal Panel may: (a) decide to deal with the internal appeal by way of a new hearing if it considers that the grounds for the appeal warrant a new hearing, and (b) permit such fresh evidence, or evidence in addition to or in substitution for the evidence received by the Tribunal at first instance, to be given in the new hearing as it considers appropriate in the circumstances."
4. In the circumstances, the Appeal Panel has jurisdiction to hear and determine the appeal brought by Sakkara, a party to the proceedings below, against certain of the September 2015 Orders. Further, those orders were not interlocutory, but final, orders. Consequently, the appeal is to be dealt with under s 80(2)(b) and leave to appeal is not required in respect of grounds which raise a question of law, but leave to appeal is required in order to appeal on other grounds.
5. As the functions of the Tribunal under the RV Act are allocated to the Consumer and Commercial Division by cl 3 of Sch 4 to the Act, the decision appealed from is a decision of the Consumer and Commercial Division and, consequently, cl 12 of Sch 4 of the Act applies. Under cl 12(1), the ability of the Appeal Panel to grant leave, if required, is limited to situations in which the Appeal Panel is satisfied that the appellant may have suffered a substantial miscarriage of justice because: "(a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with)."
6. The principles that apply in relation to the granting of leave to appeal under cl 12 of Sch 4 to the Act include the following: 1. a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred - Collins v Urban [2014] NSWCATAP 17 at [71]; 2. a decision can be said to be "against the weight of evidence" where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach - Collins v Urban at [77(2)]; 3. if the Appeal Panel is satisfied that there may have been substantial miscarriage of justice on one of the grounds in cl 12(1)(a), (b) or (c), it has a discretion whether to grant leave and it will generally only be appropriate to grant leave to appeal in a matter where the decision is more than arguably wrong and the matter involves: 1. issues of principle; or 2. questions of public importance or matters of administration or policy which might have general application; or 3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; or 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed, 6. - Collins v Urban at [84].
7. The Appeal Panel will deal with the question of leave, when required, as each ground of appeal is considered.

The Legislative Scheme of the Retirement Villages Act and Relevant Provisions

1. The RV Act was enacted in 1999 and established a detailed, legislative regulatory regime for retirement villages. Previously, retirement villages had been regulated by way of a mandatory industry code of conduct which had been found to be ineffective in providing adequate protection for retirement village residents - Retirement Villages Bill 1999, Second Reading Speech (New South Wales Legislative Assembly, Parliamentary Debates (Hansard) 27 October 1999 at 2089).
2. The objects of the RV Act are set out in s 3 and include: "(a) to set out particular rights and obligations of residents and operators of retirement villages, and … (d) to facilitate resident input, where desired by residents, into the management of retirement villages, and (e) to establish appropriate mechanisms for the resolution of certain disputes between residents and operators of retirement villages, and (f) to encourage the retirement village industry to adopt best practice management standards."
3. The issues raised in this appeal concern most specifically the financial management provisions of the RV Act found in Pt 7 and the powers of the Tribunal to resolve disputes in Pt 8. The other substantive parts of the RV Act include: 1. Pts 3, 4 and 5 which deal with matters preliminary to a person becoming a resident of a retirement village and the contractual arrangements between an operator and resident under the various types of village contract provided for in the RV Act; 2. Pt 6 which makes provision for the general management of retirement villages; and 3. Pts 9 and 10 cover termination of residence in a retirement village and vacation of premises.
4. Part 7, "Financial management of retirement villages", consists of ss 91 to 120C.
5. Div 1 of Pt 7 (s 91) deals with how the financial year for a particular village is determined. In this case, there was no dispute that the financial year for The Landings was the 12 month period from 1 July each year to 30 June the following year.
6. Although questions of capital maintenance and replacement were relevant to a number of the orders made in the Tribunal at first instance, these orders are not challenged on appeal. Consequently Div 2 of Pt 7 (ss 92 - 101), which deals with capital maintenance and replacement, does not need to be considered in detail here.
7. The present appeal concerns primarily whether the income by way of recurrent charges received by the operator from residents was properly expended in FY 14 and whether there was a surplus or deficit in FY12 and FY13 and related matters.

Income - Recurrent Charges

1. The operation of a retirement village is primarily funded from income by way of the recurrent charges paid by the residents to the operator. The recurrent charges which an operator may collect from residents are established by the village contracts and by any variation to those amounts permitted by Div 4 of Pt 7 of the RV Act.
2. A village contract is a contract between the operator and the resident of a retirement village that falls within the definition of "village contract" in s 4(1) of the RV Act, which is in the following terms: "village contract means: (a) a residence contract, or (b) a service contract, or (c) a contract under which a resident of a retirement village obtains the right to use a garage or parking space, or a storage room, in the village, or (d) any other contract of a kind prescribed by the regulations for the purpose of this definition. Note. A residence contract, a service contract and any other village contract may be contained in a single document."
3. In the present case, neither party contended that anything turned upon the terms of any of the relevant village contracts. Consequently, they do not need to be considered further in this appeal.
4. The provisions of Div 4 of Pt 7 of the RV Act (ss 102A - 111) which are relevant in the present case are referred to in more detail in the following paragraphs.
5. Section 102A contains definitions of the expression "prescribed CPI variation", which serves as a reference point for how variations of recurrent charges are required to be dealt with under Div 4. The original provisions relying on a CPI reference point were inserted into the RV Act, or relevantly amended, by the Retirement Villages Amendment Act 2008 (NSW) (the 2008 Amendment). Section 102A itself, however, was only inserted later by the Statute Law (Miscellaneous Provisions) Act 2013 (NSW).
6. Section 104 deals with how recurrent charges may be varied, from year to year or otherwise, and provides: "104 Variation of recurrent charges (1) A village contract may provide that any recurrent charges payable under it: (a) are to be varied at specified intervals (or on specified dates) according to a fixed formula (for example, in proportion to variations in the Consumer Price Index), or (b) may be varied otherwise than according to a fixed formula. (2) If a village contract provides for any recurrent charges payable under it to be varied otherwise than according to a fixed formula, the recurrent charges must not be varied more than once in any 12 month period. Any second or subsequent purported variation within that 12 month period is of no effect. (3) A village contract must not provide for more than one method of variation of the recurrent charges payable under it. (4) If a village contract provides for more than one method of variation of recurrent charges in contravention of subsection (3), the method that results in the lowest increase in recurrent charges is the applicable method."
7. Section 105 sets out the notice requirements if recurrent charges are varied by fixed formula.
8. The general effect of ss 105A to 106A is that where a variation otherwise than by fixed formula does not exceed the prescribed CPI variation, residents' consent is not required in order to vary the recurrent charges. The operator is, however, required to give the notice of a proposed variation prescribed by s 105A(3) or s 106(1B), as appropriate.
9. Sections 107 and 108 provide that, where the proposed variation exceeds the prescribed CPI variation, the variation can only be given effect to with the residents' consent or by order of the Tribunal, as follows: "107 Residents' consent to variation (1) A variation does not take effect under section 106 unless: (a) the residents whose recurrent charges will be affected by the variation consent to the variation, or (b) the Tribunal orders under section 108 that the variation take effect. (2) The residents concerned must, within 30 days after receiving a notice under section 106: (a) meet, consider and vote on the proposed variation, and (b) advise the operator that they consent, or do not consent (as the case may be) to the variation. (3) If the operator is not advised as required by subsection (2) (b), the residents are taken to have refused consent to the variation. (4) The operator must provide such information in relation to the proposed variation as the Residents Committee (or, if there is no Residents Committee elected for the village, any resident) reasonably requests for the purpose of deciding whether consent should be given to the variation. (5) If the operator of a retirement village fails to provide information requested under subsection (4) within the time prescribed by the regulations, the Residents Committee (or a resident of the retirement village) may apply to the Tribunal for (and the Tribunal may make) an order requiring the operator to provide the residents with the information specified in the order. (6) The regulations may prescribe: (a) the period within which information requested under subsection (4) must be provided, and (b) information that the operator of a retirement village is not required to provide despite a request under subsection (4). 108 Determination by Tribunal (1) An operator of a retirement village may apply to the Tribunal for (and the Tribunal may make) an order in respect of a proposed variation of recurrent charges if: (a) the consent of the residents of the retirement village is required before the proposed variation can take effect, and (b) the residents do not consent to the proposed variation under section 107. (2) The Tribunal may, on application by the operator: (a) order that the proposed variation is to take effect, with or without modification, or (b) order that the proposed variation is not to take effect. (3) An order under subsection (2) (a) may: (a) specify the date from which the variation is to take effect (which may be a date other than the date specified by the operator in the notice given under section 106), and (b) order that the recurrent charges are not to be further varied for a specified period, being a period that does not exceed 12 months. (4) In determining an application made under this section, the Tribunal may have regard to the following: (a) the general market level of recurrent charges paid at similar retirement villages in the locality of the retirement village concerned or a similar locality, (b) the level and cost of services and facilities provided for in the proposed annual budget or approved annual budget (as the case may be), (c) any proposed variations (including additions) to those services and facilities, being variations to which the residents have consented, (d) the cost of general services required to be provided by the operator, (e) the frequency and amount of past variations of the recurrent charges, (f) if the retirement village is subject to a community land scheme or strata scheme - the amounts of levies and other contributions payable by the residents under the Community Land Management Act 1989 or the Strata Schemes Management Act 1996, (g) any other relevant matter."
10. The Tribunal may order a refund of recurrent charges under s 109, where recurrent charges have been overpaid "on any grounds". Section 110 provides that the operator must give receipts to residents for payments of recurrent charges unless the payment is made into an account at an authorised deposit taking institution as agreed between the operator and the resident. Under s 111, an abatement of recurrent charges may arise in certain circumstances.

Expenditure

1. The operator generally cannot expend the recurrent charges it collects otherwise than in accordance with an annual budget approved or determined under Div 5 of Pt 7 (ss 112 - 117).
2. Section 112 relevantly provides: "112 Proposed annual budget (1) At least 60 days before the commencement of each financial year of a retirement village, or such other time as may be prescribed by the regulations, the operator of the village must supply each resident of the village with a proposed annual budget itemising the way in which the operator proposes to expend the money to be received by way of recurrent charges from the residents of the village during the financial year. Maximum penalty: 100 penalty units. … (3) The regulations may make provision for or with respect to: (a) matters that must be dealt with in a proposed annual budget, and (b) matters that must not be financed by way of recurrent charges, and (c) the form that the budget is to take. (4) The budget is to be accompanied by a notice: (a) stating that the operator of the village is required to obtain the consent of the residents before expending the money as itemised in the budget, and (b) stating further that, if the residents do not give their consent, the operator may expend the money in accordance with an order of the Tribunal, and (c) briefly explaining the reasons for any changes in expenditure from the previous financial year, and (d) stating that if any change in expenditure arises from a variation in the services or facilities provided at the village by the operator, consent to that variation must be by way of a special resolution of the residents, and (e) containing such other information as may be prescribed. (5) The notice may (but need not) further state that the notice operates as the operator's formal request for the consent of the residents to the expenditure of the money as itemised in the budget. (6) Nothing in this section prevents an operator of a retirement village from cancelling a proposed annual budget and replacing it with an amended budget at any time."
3. If a proposed budget is not provided in accordance with s 112, a resident can apply to the Tribunal for an order requiring the budget to be supplied under s 113 of the RV Act.
4. The form and content of the proposed budget is prescribed by cl 17 of the RV Regulation which provides: "17 Matters that must be dealt with in proposed annual budget (1) For the purposes of section 112 (3) (a) of the Act, the matters that must be dealt with in a proposed annual budget are the following: (a) the amount of recurrent charges payable by residents of the village during the year (including any expected increases in those charges in line with a fixed formula), (b) the method by which that amount has been calculated, (c) the total expected income from recurrent charges for the village for the year, (d) the effect of the expected surplus or deficit (as the case may be) for the current year on the finances of the village, (e) all proposed categories of expenditure (without grouping together 2 or more unlike categories), (f) the proposed expenditure on each of those categories, the proposed expenditure on each of them as indicated in the approved annual budget for the current year, and the likely actual expenditure on each of them for the current year, (g) if any expenditure (proposed or actual) is an apportionment of a total expenditure relating to the village and one or more other villages or businesses - the method or calculation by which the expenditure is apportioned, (h) if any residents of the village are paying significantly higher recurrent charges than some other residents of the village (for example, because they are receiving optional services) - the method or calculation by which expenditure is apportioned between the categories of residents concerned, (i) the total proposed expenditure of the village for the year, (j) the expected surplus or deficit for the year. (2) If the annual budget includes any costs associated with the operator's head office or any management or administration fees, these are to be broken down to show the goods and services to which they relate and the approximate cost of those goods and services."
5. Section 114 requires that residents' consent to expenditure must be obtained in certain circumstances and relevantly provides: "114 Residents' consent to expenditure (1) The operator of a retirement village must (whether by way of a notice referred to in section 112 or otherwise) seek the consent of the residents of the village to the expenditure itemised in the proposed annual budget. Maximum penalty: 100 penalty units. (2) The operator must provide such information in relation to the proposed expenditure as the Residents Committee (or, if there is no Residents Committee elected for the village, any resident) reasonably requests for the purpose of deciding whether consent should be given to the budget. (3) Without limiting subsection (2), it is reasonable for the Residents Committee or a resident to request to see quotations for any work proposed to be carried out or for any service or facility proposed to be provided. (4) The residents concerned must, within 30 days after receiving a request for consent to a proposed annual budget (or an amended budget): (a) meet, consider and vote on the budget, and (b) advise the operator that they consent, or do not consent (as the case may be) to the budget, and (c) if they do not consent to the budget - specify the item or items in the budget to which they object. (5) If the operator is not advised as required by subsection (4) (b), the residents are taken to have refused consent to the budget. (6) If the operator fails to seek the consent of the residents, the residents are taken to have refused consent to the budget. … (8) Subsections (1)-(6) do not apply, and the residents are taken to have consented to the proposed annual budget, if the recurrent charges payable by the residents: (a) have not been varied, or (b) have been varied in accordance with section 104 (1) (a) or 105A."
6. Section 115 provides that, where the residents refuse consent, the Tribunal may make orders to determine the extent of any expenditure. Section 115 states: "115 Determination of expenditure by Tribunal (1) If the residents of a retirement village refuse consent to the expenditure itemised in the proposed annual budget, the operator or a resident may apply to the Tribunal for an order in respect of the expenditure proposed for the financial year concerned. (2) If an application is made under this section, the Tribunal may do one or more of the following: (a) make interim orders allowing expenditure on all items in the proposed annual budget other than those specified under section 114 (4) (c), (b) give procedural directions to the parties to facilitate agreement between the parties concerning the proposed expenditure (including directions to prepare new costings for services and to meet and discuss disputed matters), (c) make recommendations to the parties about the proposed expenditure (including recommendations about the cost and type of the services to be provided), (d) order that the expenditure is to be as itemised in the proposed annual budget, (e) order that there is to be no expenditure, or reduced or increased expenditure, on any particular item in the proposed annual budget, (f) order that there is to be expenditure in a specified amount on an item that does not appear in the proposed annual budget, (g) order that the expenditure is to be as specified in the order, (h) determine liability for expenses (if any) incurred from the commencement of the financial year to which the proposed annual budget relates until the date on which an order under paragraph (d), (e), (f) or (g) is made, (i) make any other order prescribed by the regulations for the purpose of this section. (3) If: (a) the operator makes an application under this section, and (b) the Tribunal does not, before the commencement of the financial year to which the proposed annual budget relates, make an order that gives rise to an approved annual budget, the operator may, until the Tribunal makes the relevant order, expend money received by way of recurrent charges to meet the reasonable and necessary costs of operating the village. (4) In determining an application made by the operator under this section, the Tribunal may review any expenditure made under subsection (3) and may order that the operator is liable for so much of that expenditure as it considers was not reasonable or necessary. (5) If the Tribunal gives directions or makes recommendations for further action under subsection (2), it may adjourn the proceedings for a report from the parties and, if necessary, take further action under subsection (2) when proceedings resume. (6) In determining an application made under this section, the Tribunal may have regard to the following: (a) the reasonable cost of services provided (or proposed to be provided) in the village, (b) the need for the services to be provided in the village, (c) any other relevant matter. (7) If the Tribunal receives an application under this section at the same time as (or while there is before it) an application under section 108 in relation to recurrent charges payable at the same retirement village, it must make a determination under this section before making a determination under section 108."
7. Section 115A, which was inserted by the 2008 Amendment, establishes that the proposed annual budget may provide for contingencies within the limits specified in the Regulations. The limit is $100: see cl 20 of the RV Regulation.
8. Section 116 is a key provision for a number of reasons. First, it specifies the two circumstances under which a proposed annual budget may become an approved annual budget in subs (1). Secondly, it establishes in subs (3) an express prohibition on the expenditure of recurrent charges otherwise than in accordance with an approved annual budget (except for minor variations or variations falling within subs (3A)). Thirdly, in subs (4), it establishes a refund remedy for residents if the operator contravenes the section. Section 116 provides: "116 Expenditure to be in accordance with approved annual budget (1) A proposed annual budget is taken to be an approved annual budget if: (a) the residents of a retirement village consent to expenditure in accordance with the proposed annual budget, or (b) the Tribunal orders that the expenditure of the operator is to be as itemised in the proposed annual budget. (2) However, if the Tribunal makes any other order in relation to the proposed annual budget, the approved annual budget is taken to be that budget modified to accord with the order. (3) The operator must not expend money received by way of recurrent charges otherwise than in accordance (apart from minor variations) with the approved annual budget or any amendment authorised under section 117. Maximum penalty: 100 penalty units. (3A) An operator does not contravene subsection (3) if the expenditure that was otherwise than in accordance with the budget: (a) was a variation in expenditure between items in the approved annual budget, and (b) does not reduce the level of services provided by the retirement village, and (c) does not cause the total expenditure provided for by the approved annual budget to be exceeded. (4) If the operator: (a) contravenes subsection (3), or (b) did not (despite any order of the Tribunal under section 113) supply a proposed annual budget in respect of a current financial year, a resident may apply to the Tribunal for (and the Tribunal may make) an order directing the operator to refund the recurrent charges paid by the resident during so much of the financial year as has passed at the time the order is made."
9. It can be noted that subs (3A) was not originally included in s 116 of the RV Act but was inserted by the 2008 Amendment. It should also be noted that subs (4) allows a resident to seek an order for refund of recurrent charges paid in respect of that part of the financial year where those charges have been paid in contravention of subs (3) or until a proposed budget has been supplied.
10. Section 117 provides some flexibility by permitting amendments to be made to an existing approved annual budget as follows: "117 Amendment of approved annual budget (1) The operator of a retirement village may seek the consent of the residents to amend an approved annual budget except if: (a) the budget is taken to be an approved annual budget because of section 116 (1) (b), or (b) the budget is a proposed annual budget modified in accordance with an order of the Tribunal as referred to in section 116 (2). (2) If the residents consent to the amendment, the operator is authorised to expend money in accordance with the approved annual budget as amended. (3) If the residents do not consent to the amendment, the operator may apply to the Tribunal for an order approving the amendment. If the Tribunal makes such an order, the operator is authorised to expend money in accordance with the approved annual budget as amended. (4) In the case of an amendment that relates to further expenditure, the Tribunal is not to make an order under subsection (3) unless the Tribunal is satisfied that: (a) there is an urgent need for the further expenditure, and (b) the further expenditure was not reasonably foreseeable when the proposed annual budget was approved under section 116."

Audited Accounts

1. Under Div 6 of Pt 7 (ss 118 - 119B), audited annual accounts including details of the income and expenditure for the financial year must be provided to the residents.
2. Section 118 requires that audited annual accounts and quarterly accounts, which need not be audited, must be provided by the operator to the residents.
3. Section 119(1) requires the audited annual accounts are to be provided to residents within 4 months of the end of the financial year and stipulates additional obligations regarding the provision of annual audited accounts as follows: "(2) The audited accounts must include (but are not limited to): (a) the following particulars: (i) details of the income and expenditure of the village during the financial year, including income and expenditure of the capital works fund (if any), (ii) details of the balance of the capital works fund (if any), (iii) details of amounts received for insurance claims made in respect of any matter referred to in section 100 (2) (a) (i) or (ii) relating to the village during the financial year, (iv) details of any interests, mortgages and other charges affecting the property of, or forming part of, the village (other than property or premises owned by residents of the village) as at the end of the financial year, and (b) a statement that: (i) specifies whether or not money payable by the village operator to former residents during the financial year concerned was paid in full and on time, and, (ii) specifies, if any money so payable has not been paid, the amount concerned, details of the delay and the reasons for the delay, and (iii) contains the matters required to be included by subsection (3), and (iv) gives details of any matters that may prevent the village operator from meeting those liabilities, and (c) such other matters as may be prescribed by the regulations. (3) If the auditor is not satisfied that the operator has the capacity, during the financial year immediately following, to meet the liabilities relating to the village as and when they fall due, or if the auditor believes that there is considerable uncertainty regarding the ability of the operator to meet the liabilities of the village as and when they fall due during the financial year immediately following, a statement to that effect must appear in the audited accounts. (4) The format of the accounts must correspond as closely as possible with the layout of the proposed annual budget." …
4. Sections 119A and 119B, which were inserted by the 2008 Amendment, provide for circumstances (generally where the annual total of recurrent charges does not exceed $50,000 or the residents consent) in which the operator may not be required to audit accounts or provide quarterly accounts, respectively.

Surpluses and Deficits

1. How any surplus or deficit disclosed in the audited annual accounts may be dealt with is covered by Div 7 of Pt 7 (ss 120A - 120C) as follows: "120A Definitions In this Division: deficit means a deficit in the annual accounts of a retirement village for any financial year ending on or after 23 November 2006. surplus means a surplus in the annual accounts of a retirement village for any year. 120B Any surplus to be carried over (1) Any surplus in the annual accounts of a retirement village is to be carried forward to the accounts for the next financial year unless: (a) the residents of the village consent to a proposal for the expenditure of the whole or any part of the surplus, or (b) the residents of the village consent to a proposal that the operator distribute the whole or any part of the surplus to the existing residents of the village in equal shares. (2) A proposal under subsection (1) may be made by the operator of the retirement village or the Residents Committee (if any). (3) If the residents consent under subsection (1) (b) to a proposal made by the Residents Committee, the operator may apply to the Tribunal for (and the Tribunal may make) an order that: (a) the distribution is not to be made, or (b) approves or varies the proposed distribution. (4) In making an order under subsection (3), the Tribunal may consider the following: (a) the proportion of the surplus that is proposed to be distributed, (b) any other matter that the Tribunal considers appropriate. 120C Making good of deficit (1) A deficit is to be made good by the operator of the retirement village. (2) Except as provided by the regulations referred to in subsection (3), an operator of a retirement village must not: (a) carry forward a deficit to a subsequent financial year, or (b) request or receive from the residents of the retirement village any special additional payments for the purpose of making good a deficit, or (c) increase or purport to increase recurrent charges payable by the residents of a retirement village in any financial year for the purpose of making good a deficit, or (d) use the whole or any part of the recurrent charges collected by the operator in a financial year to make good a deficit, or (e) use the whole or any part of the capital works fund for the retirement village to make good a deficit. (3) The regulations may prescribe circumstances in which the operator of a retirement village may: (a) increase the recurrent charges payable by the residents of a retirement village for the purpose of making good a deficit, or (b) use the whole or any part of the recurrent charges collected by the operator for the purpose of making good a deficit, or (c) carry forward a deficit to a subsequent financial year. (4) The operator of a retirement village must not charge the residents of a retirement village interest in respect of a deficit."
2. From these provisions, it can be seen that surpluses or deficits are calculated, and are to be dealt with, on an annual basis.

Disputes and the Role of the Tribunal

1. If a dispute arises between an operator and the residents, either side may apply to the Tribunal under Pt 8 of the RV Act (ss 121 - 128) and the Tribunal has power to make orders under s 128 and ancillary orders under s 126, without any monetary limit (s 127).
2. Section 128 empowers the Tribunal to make certain orders as follows: "128 Order of Tribunal (1) The Tribunal may, on application by a resident (or residents) or an operator under this Act, make one or more of the following orders: (a) an order directing the resident (or residents) or operator to comply with a requirement of this Act or the regulations, (b) an order that varies or sets aside a provision of a village contract that conflicts with this Act or the regulations, (c) an order that: (i) restrains any action in breach of any village contract or village rule, or (ii) requires the performance of any village contract or village rule, (d) an order directing the resident (or residents) or operator to perform such work or take such other steps as the order specifies to remedy a breach of a village contract or village rule, (e) an order for the payment of an amount of money, (f) an order for compensation, (g) an order that requires payment to the Tribunal of all or part of any recurrent charges payable by a resident (or residents) to the operator until the whole or part of any village contract has been performed or any application for compensation has been determined, (h) an order that requires payment (out of recurrent charges paid to the Tribunal) towards the cost of remedying a breach of a contract or towards the cost of any compensation, (i), (j) (Repealed) (k) in the case of an application in relation to any other dispute made by a resident (or residents) or an operator of a retirement village that is subject to a community land scheme and with the concurrence of the other party to the dispute - any order that the Tribunal may make under the Community Land Management Act 1989 to determine the dispute, (k1) in the case of an application in relation to any other dispute made by a resident (or residents) or an operator of a retirement village that is subject to a strata scheme and with the concurrence of the other party to the dispute - any order that the Tribunal may make under the Strata Schemes Management Act 1996 to determine the dispute, (l) any other order prescribed by the regulations for the purposes of this section. (2) Nothing in this section limits the orders that the Tribunal may make under this Act."
3. As has already been noted, the RV Act also empowers the Tribunal to make orders for a refund of recurrent charges under ss 109 and 116(4), as well as orders, if residents refuse to consent to the operator's proposals in relation to recurrent charges, under s 108 or, in relation to budgeted expenditure, under ss 115 and 117.

The Appeal against Order 2 of the September 2015 Orders

1. The Appeal Panel now turns to consider the appeal against order 2 of the September 2015 Orders. That order required Sakkara to pay to each of the 220 eligible residents the sum of $135.52, a total of $29,815, "by way of refund of overcharged recurrent charges" under ss 109 and 116(4) of the RV Act, see [75] of the reasons for decision of the Tribunal below.

Order 2 - Relevant Facts

1. Apart from the issue of whether the audited accounts for FY14 were sufficient to discharge any onus of proof under s 116(3A) which Sakkara might bear, various factual matters were not in issue at first instance (see [60] - [64], [71] - [72] of the reasons for decision of the Tribunal below) or on appeal. Further, there was no issue in the appeal that the recurrent charges to which this order 2 related were paid by the residents. Consequently, the Appeal Panel has had regard to the findings made by the Tribunal below and to the documents referred to in those findings or relied upon by the Tribunal below.
2. This material establishes that by letter dated 7 February 2014, the Village Manager on behalf of Sakkara gave notice of three motions to be put to the residents at a meeting to be held on 27 February 2014. The three motions were: "Motion 1 That residents accept the amended proposed budget involving a total expense of $1,331,394 an increase of $61,354 primarily caused by increases in utility and statutory charges. Motion 2 That Residents' accept the new resulting Recurrent Charge for the financial year 2014 of $523.30 per month. Motion 3 The Residents' accept, additional to the new Recurrent charge, a surcharge per month of $46.73 for each of the remaining four months of financial year 2014"
3. The original approved annual budget for FY14 and the recurrent charges set in accordance with s 104 of the RV Act were before the Tribunal below and the Appeal Panel.
4. The "amended proposed budget" which was voted on by the residents was a spread sheet headed "THE LANDINGS AT TURRAMURRA PROPOSED ANNUAL BUDGET FOR FINANCIAL YEAR: 2013/14 Amended Budget Feb 2014". This amended budget listed numbered items of income and expenditure in two columns headed "CURRENT YEAR BUDGET Year: 2013/2014" and "AMENDED BUDGET Year: 2013/2014". The requirement to itemise a proposed budget in this way is found in s 114(1).
5. In another column, headed "$ Increase", the amount of any increase (or decrease) in the amended budget compared to the current budget was set out. In a further column, some explanations were given of the reasons for the increases and decreases. The rows in this spread sheet generally related either to items of income or items of expenditure: 1. Under the general heading "Income", there were 13 line items numbered 1 to 13. Against line item 1, "Income from Recurrent Charges", the increase from the current budget to the amended budget was stated to be $61,354. There were two other very minor adjustments to income items. 2. Under the general heading "Expenditure", there were 43 line items of expenditure numbered 15 to 57, many of which were not changed in the amended budget. The most significant amendments to expenditure line items can be summarised as follows (there were additional minor amendments adding a net $259 so that the total increase in expenditure was $61,228): Line Item No … CURRENT YEAR BUDGET Year: 2013/14 AMENDED BUDGET Year: 2013/14 $ Increase Council Rates 15 70,610 85,622 15,012 Insurance 16 127,402 107,107 (20,295) Water Charges 21 154,465 184,659 30,195 Gas 22 9,369 14,744 5,375 Electricity 23 81,041 111,723 30,682 TOTAL $503,855

1. The three motions referred to above were all approved at the meeting of residents on 27 February 2014. Consequently: 1. for the purposes of s 106 of the RV Act the recurrent charges for FY14 were varied as set out in motions 2 and 3, by virtue of the residents' consent in accordance with s 107; and 2. the original annual approved budget for FY14 was amended, as recorded in the spread sheet referred to above, with the consent of the residents in accordance with s 117.
2. Thus, under s 117(2), Sakkara was authorised to expend money in accordance with the approved annual budget as so amended, and the increased expenditure was funded from the increased recurrent charges for FY14 agreed to by the residents, in accordance with ss 106 and 107. Nonetheless, s 116(3) applied so that Sakkara could "not expend money received by way of recurrent charges otherwise than in accordance (apart from minor variations) with the approved annual budget or any amendment authorised under s 117".
3. The operation of s 116(3) is, however, qualified by s 116(3A) which has the effect that Sakkara would not contravene s 116(3) if the expenditure that was otherwise than in accordance with the budget met three conditions, namely: 1. it was a variation in expenditure between items in the approved annual budget; and 2. it did not reduce the level of services provided by the retirement village, and 3. it did not cause the total expenditure provided for by the approved annual budget to be exceeded.
4. When the audited accounts for FY14 were made available in late 2014, they revealed that the actual expenditure on the items at lines 15, 16, 21, 22 and 23 of the amended approved annual budget for FY14 was as follows: Line Item No … Actual in FY14 Audited Accounts Council Rates 15 84,253 Insurance 16 101,395 Water Charges 21 170,524 Gas 22 12,134 Electricity 23 105,734 TOTAL $474,040

1. The difference between the amount budgeted for these items in the amended approved annual budget and the amount actually spent on these items was $29,815 ($503,855 - $474,040). The audited annual accounts also revealed that all recurrent charges were expended on the items of expenditure listed in those accounts.

Order 2 - Decision of the Tribunal below and Grounds of Appeal

1. The Tribunal below held at [73] of its reasons that if the operator sought to rely on the exception in s 116(3A) to avoid a finding of contravention of s 116(3), the operator bore the onus of proof in respect of the matters referred to in s 116(3A)(a), (b) and (c).
2. The Tribunal then said at [74]: "In my opinion, having regard to the requirement under section 114 for the operator of a retirement village to seek consent of the residents of the village to the expenditure itemised in the proposed annual budget, coupled with the provisions of section 116(3) which provide that the operator must not expend money received by way of recurrent charges otherwise than in accordance with the approved annual budget or any amendment thereof, prima facie if an amount itemised in a proposed annual budget to which the residents have consented is not spent in accordance with that budget, and the provisions of s 116 (3A) do not apply, then the residents are entitled to have that amount refunded to them."
3. The Tribunal concluded at [74] in the light of the facts as found that, since the operator had not discharged that onus, the residents were entitled to have the amount of $29,815, received by the operator by way of recurrent charges but not spent in accordance with the approved amended budget for FY14, returned to them under s 109 or s 116(4) of the RV Act. Order 2 of the September 2015 Orders gave effect to that conclusion.
4. In this appeal, Sakkara challenged order 2 on the two grounds set out above, namely: 1. the erroneous imposition of the onus ground; and 2. the onus discharged ground.

Order 2 - the erroneous imposition of the onus ground

1. It was accepted by the parties that this ground raised a question of law and the Appeal Panel proceeded on that basis.

Appellant's Submissions

1. Sakkara submitted that s 116 as a whole was a penal provision and the onus of disproving the matters referred in s 116(3A) should lie on the person asserting that s 116(3) had been contravened. Sakkara's solicitor summarised the position thus: "the tribunal's discretion to order a refund of charges only arises if the [residents] prove two things, not one. The first element of proof is that charges to residents were spent in a manner discordant with the budget (sub-s (3)). The second … is that residents did not otherwise benefit through the budget from those charges (sub-s(3A))."
2. It was submitted that the onus in respect of the matters in s 116(3A) should remain on the person asserting that s 116(3) had been contravened for a number of reasons: 1. s 116(3A) was silent as to who bore the onus and the presumption of innocence favoured not imposing an onus on the person alleged to have contravened s 116(3); 2. The onus of proving that the exception for "minor variations" in s 116(3) did not apply lay on the person asserting contravention and the exception established by s 116(3A) should be treated in the same way; 3. The Parliament intended that the introduction of s 116(3A) would enable operators to enjoy "greater flexibility over the financial management of a village" and this might be effectively defeated if an operator had to prove what the money was spent on.

Respondent's Submissions

1. The Residents Committee submitted that the Tribunal's conclusion that Sakkara bore the onus of proving that it was entitled to the benefit of the exception established by s 116(3A) involved no appellable error. It was submitted that the RV Act was essentially consumer protection legislation and it should be construed so as to ensure that the consumers, that is the residents, were protected from improper conduct by an operator.
2. In particular, it was submitted that it was the operator, not the residents, who had direct knowledge of how the recurrent charges received by the operator were spent. Accordingly, the onus should rest on the operator to establish that its expenditure of the recurrent charges was a variation between items in the approved budget, if the operator was to have the benefit of the exception to the contravention of s 116(3) created by subs (3A).

Consideration of the Erroneous Imposition of the Onus of Proof Ground

1. Section 116(3) prohibits an operator from expending "money received by way of recurrent charges otherwise than in accordance (apart from minor variations) with the approved annual budget or any amendment authorised under section 117".
2. Section 116(3A) states that "[a]n operator does not contravene subsection (3) if" three additional factual circumstances are satisfied, namely: 1. the expenditure that was otherwise than in accordance with the budget was a variation in expenditure between items in the approved annual budget; 2. the non-compliant expenditure did not reduce the level of services provided; 3. the non-compliant expenditure did not cause the total expenditure to exceed the approved annual budget.
3. Section 116(3) of the RV Act imposes an obligation that is the subject of a qualification, exception or proviso in subs (3A). Resolution of the question of which party bears the onus of proving or disproving the matters referred to in subs (3A) depends essentially on the proper construction of s 116, see Vines v Djordjevitch [1955] HCA 19; (1955) 91 CLR 512 at 519.
4. The applicable principles were summarised by McHugh J in the High Court in Avel Proprietary Limited v Multicoin Amusements Proprietary Limited [1990] HCA 58; (1990) 171 CLR 88 at 119 (Avel) as follows: "When a statute imposes an obligation which is the subject of a qualification, exception or proviso, the burden of proof concerning that qualification, exception or proviso depends on whether it is part of the total statement of the obligation. If it is, the onus rests on the party alleging a breach of the obligation. If, however, the qualification, exception or proviso provides an excuse or justification for not complying with the obligation, the onus of proof lies on the party alleging that he falls within the qualification, excuse or proviso: Vines v. Djordjevitch (1955) 91 CLR 512, at p 519. Whatever form the statute takes, the question has to be determined as one of substance: Vines, at p 519; Banque Commerciale S.A, en Liquidation v. Akhil Holdings Ltd. (1990) 169 CLR 279, at p 285."
5. In Avel, Mason CJ, Toohey and Gaudron JJ (at 93) agreed with McHugh J and held (at 94-5): The onus of proving the absence of the licence of the owner of the copyright in relation to an issue of infringement under s.37 or s.38 of the Act lies on the party who asserts infringement. The reason why that is so is that the absence of such licence constitutes an element of the wrong of infringement under those sections as distinct from a justification or excuse for doing something which prima facie constitutes infringement.
6. The High Court in Vines v Djordjevitch (1955) 91 CLR 512 at 519 had earlier set out the relevant general propositions that apply in a case such as the present as follows: "In the end, of course, it is a matter of the intention that ought, in the case of a particular enactment, to be ascribed to the legislature and therefore the manner in which the legislature expressed its will must remain of importance. … When an enactment is stating the grounds of some liability that it is imposing or the conditions giving rise to some right that it is creating, it is possible that in defining the elements forming the title to the right or the basis of the liability the provision may rely upon qualifications exceptions or provisos and it may employ negative as well as positive expressions. Yet it may be sufficiently clear that the whole amounts to a statement of the complete factual situation which must be found to exist before anybody obtains a right or incurs a liability under the provision. In other words it may embody the principle which the legislature seeks to apply generally. On the other hand it may be the purpose of the enactment to lay down some principle of liability which it means to apply generally and then to provide for some special grounds of excuse, justification or exculpation depending upon new or additional facts. In the same way where conditions of general application giving rise to a right are laid down, additional facts of a special nature may be made a ground for defeating or excluding the right. For such a purpose the use of a proviso is natural. But in whatever form the enactment is cast, if it expresses an exculpation, justification, excuse, ground of defeasance or exclusion which assumes the existence of the general or primary grounds from which the liability or right arises but denies the right or liability in a particular case by reason of additional or special facts, then it is evident that such an enactment supplies considerations of substance for placing the burden of proof on the party seeking to rely upon the additional or special matter: …"
7. The Full Court of the Federal Court considered the effect of statutory wording similar to that in s 116(3) and (3A) in Rural Export & Trading (WA) Pty Ltd v Hahnheuser [2008] FCAFC 156; 169 FCR 583. The relevant provisions in that case were ss 45DB(1) and 45DD(3) of the Trade Practices Act 1974 (Cth) (as the Competition and Consumer Act 2010 (Cth) then was). Section 45DB(1) prohibited a person from engaging, in concert with another person, "in conduct for the purpose, and having or likely to have the effect, of preventing or substantially hindering a third person (who is not an employer of the first person) from engaging in trade or commerce involving the movement of goods between Australia and places outside Australia". Section 45DD(3) stated that: "(3) A person does not contravene … subsection … 45DB(1) if: (a) the dominant purpose for which the conduct is engaged in is substantially related to environmental protection or consumer protection; and (b) engaging in the conduct is not industrial action."
8. Although it was not necessary to decide the point as the appeal was disposed of on other grounds, the question of which party bore the onus of proof had been fully argued on the appeal and the Full Court dealt with the point in its judgment. The Full Court said at [40] that the form of s 45DD(3), in its natural and ordinary meaning, was that of an exemption. This was consistent with the description of that provision as "this exemption" in the notes (which could be relied upon in the circumstances under s 15AB(2)(a) of the Acts Interpretation Act 1901 (Cth)). In such a situation, the applicable principle was, as held in in Vines v Djordjevitch (1955) 91 CLR 512 at 519, that where an enactment established an exemption or exclusion from a general or primary liability in a particular case by reason of additional facts then the burden of proof was placed on the party seeking to rely upon the additional facts.
9. The Full Court (at [41)] also noted: "In addition, the language of s 45DD(3) fixes upon the dominant purpose of the person whose conduct is complained of as having contravened s 45DB(1). Ordinarily, he or she would be in the best position to give evidence as to his or her having the dominant purpose which would exculpate him or her from liability."
10. This suggests that in construing a legislative prohibition that is subject to a qualification or exemption, it is permissible to take into account whether one of the parties would ordinarily be likely to be in a better position than the other to give evidence of the exculpatory matters. Thus, the proper construction may be more likely to be the one that requires the onus of proof to be borne by the party ordinarily in the better position to give evidence of the relevantly exculpatory matters.
11. The Full Court expressed the view (at [42]) that the preferable construction of s 45DD(3) was that the person whose conduct was alleged to have contravened s 45DB(1) bore the burden of proving that he or she fell within the exemption provided by s 45DD(3).
12. The structure and nature of the prohibition and qualification or exemption in ss 45DB(1) and 45DD(3) bear a substantial resemblance to those found in s 116(3) and (3A). Section 116(3A), on the natural and ordinary meaning of its words, constitutes an exemption to the contravention established by s 116(3) and not a part of the total statement of the obligation.
13. In this regard, it can be noted that s 116(3A) was not included in the section when it was first enacted. The exemption provided by subs (3A) was only inserted as part of the 2008 amendments. This supports the view that subs (3) constitutes the whole statement of the obligation with which an operator is required to comply and subs (3A) expresses an exemption from liability in a particular case by reason of the additional or special facts set out in that subsection.
14. In addition, the Appeal Panel accepts that a competent operator of a retirement village would be likely in most if not all cases to have direct and detailed knowledge of how the money received by way of recurrent charges was expended. By way of contrast, the residents would not normally have this information except to the extent that it was made available to them by the operator, directly or through the annual audited accounts.
15. A construction of s 116 that requires the onus of proof in relation to the exculpatory matters set out in subs (3A) to be borne by the operator is also consistent with the objects of the RV Act found in s 3(d) and (f) of the RV Act: "(d) to facilitate resident input, where desired by residents, into the management of retirement villages, and … (f) to encourage the retirement village industry to adopt best practice management standards." Indeed, it can be noted that s 3(f) was inserted into the RV Act at the same time as s 116(3A).
16. In all the circumstances, it appears to the Appeal Panel that s 116(3) and (3A) together do not constitute a statement of the complete factual situation which must be found to exist before any contravention of s 116 arises. Subsection (3A) is not to be understood as "part of the total statement of the obligation" (to use the words of McHugh J in Avel). Rather, the prohibition in s 116 on expending money received by way of recurrent charges otherwise than in accordance (apart from minor variations) with an approved annual budget establishes a general or primary ground of liability upon proof of which a contravention of s 116(3) arises. That contravention or liability will, however, be avoided or negatived in a particular case where the additional or special facts referred to in s 116(3A) are established. In these circumstances, it is appropriate to conclude, in accordance with the discussion of the High Court in Vines quoted above and the approach of McHugh J in Avel, that the person seeking to rely on the additional or special matter in subs (3A) by way of exemption or exculpation from liability under subs (3) should bear the onus of proof of those matters.
17. Whilst it can be accepted that the fact that s 116 is a penal provision and that subs (3A) is silent as to who bears the onus are relevant to determining the appropriate construction of the provision as a whole, these factors are not so significant in the present case that they would override the considerations set out by the High Court in Vines and Avel and lead to the conclusion that the Residents Committee was required to establish that none of the elements referred to in s 116(3A) applied in the present case before a contravention of s 116(3) could be found.
18. Similarly, the fact that the onus of proving that any variations were not "minor variations", as referred to in s 116(3), lies on the person asserting contravention does not lead to the conclusion, in the circumstances of this case and in the light of the principles stated by the High Court, that the exception or exemption contained in s 116(3A) should be treated in the same way.
19. The second reading speech in respect of the 2008 Amendment (Retirement Villages Amendment Bill 2008, Second Reading Speech (New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 2 December 2008 at 12194ff) included the following: "Operators will be able to vary expenditure between line items in a village budget as long as the level of services in the village is not reduced and total approved expenditure is not exceeded. This will provide greater flexibility over the financial management of a village. Operators will no longer have to seek the consent of residents for increases in recurrent charges that are at or below the rate of inflation. This will be an incentive to operators to keep their costs down, and this should help those residents trying to meet rising costs on fixed incomes."
20. In order to achieve this "greater flexibility over the financial management of a village" is not, however, necessary for an operator to be relieved of the obligation to prove what the money was spent on, as Sakkara effectively submitted. Gaining this flexibility is entirely consistent with the operator bearing the onus of establishing each of the matters in s 116(3A)(a), (b) and (c) if it is to avoid what would otherwise be a contravention of s 116(3).
21. For these reasons, the Appeal Panel is of the view that an operator who has otherwise contravened s 116(3) bears the onus of proving each of the matters set out in s 116(3A) if it is to avoid a finding of contravention. Consequently, the Tribunal below did not err in holding at [73] that Sakkara had "the evidential burden of establishing that expenditure of the additional amounts approved for the utilities [and statutory charges] was spent as a variation in expenditure between items in the approved budget", although the use of the term "evidential" may not be entirely apposite.
22. Accordingly, the Appeal Panel rejects the appeal in relation to order 2 of the September 2015 Orders to the extent that it is based on the erroneous imposition of the onus ground.

Leave to Appeal

1. On the basis that this ground raised a question other than a question of law, Sakkara sought leave to appeal in respect of this ground. It was submitted that leave should be granted since Sakkara may have suffered a substantial miscarriage of justice, for the purposes of cl 12 of Sch 4 to the Act, because the decision was against the weight of the evidence (see annexure C to the notice of appeal).
2. Sakkara's ground of appeal was, however, to the effect that the Tribunal below erred in finding that Sakkara had led no evidence as to the line items in the approved budget on which the $29,815, not expended on items 15, 16, 21, 22 and 23, was actually spent. Whether there was no evidence to support a factual finding is a question of law: Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390 at [91]. As a consequence, we are of the view that the onus discharged ground should be seen as raising a question of law and thus leave to appeal is not required under s 80(2)(b) of the Act.
3. If we are wrong and leave to appeal is required, we would in any event be minded to grant leave. Sakkara submitted that there was evidence in the audited accounts for FY14 of the items upon which the recurrent charges had been spent. If this is correct, the Tribunal at first instance could be found to have proceeded upon a misapprehension as to what was contained in the evidence and it can be said that the Tribunal's conclusion was in the relevant sense against the weight of the evidence. Further, if Sakkara's contention is correct, the circumstances could be characterised as a failure in the way the matter was conducted or decided which deprived Sakkara of a chance that was fairly open of achieving a better outcome than occurred. Accordingly, in this case, it could be accepted that Sakkara might have suffered a substantial miscarriage of justice because the decision was against the weight of the evidence. In these circumstances, the Appeal Panel may, under cl 12 of Sch 4 of the Act, grant leave to appeal.
4. In order to determine whether the Tribunal's finding that there was no evidence of the relevant matters was unreasonably arrived at and clearly mistaken, it would be necessary to examine both the amended approved annual budget and the audited annual accounts for FY14. In order to do this properly, the Appeal Panel would, if required, exercise its discretion to grant leave to appeal in respect of this ground.

Appellant's Submissions

1. The Appeal Panel now turns to the substance of Sakkara's appeal on the onus discharged ground. In this regard, the core of Sakkara's submission was that the Tribunal at first instance was wrong to conclude that Sakkara "led no evidence to … explain on what line items in the varied approved budget those additional charges were spent" when it had produced the final audited accounts for FY14 prepared by HLB Mann which were "evidence that recurrent charges paid towards the utility costs were used on one or more other line items in the approved budget".
2. Sakkara pointed out that expenditure on some items in the amended annual budget approved by the residents exceeded the budget and some, such as the utilities and statutory charges referred to in items 15, 16, 21, 22 and 23 were less than the budgeted amounts. It was submitted that budgets are a forecast and that the most any reasonable operator could do was run the village from day to day and subject its accounts to regular scrutiny as required by s 118. In Sakkara's case, it was said that "[t]he agreed recurrent charges gathered through the year were pooled into a transactional account out of which was paid the various items listed in the budget".
3. Sakkara also relied upon the acknowledgement or concession by the Residents Committee that the sum of $29,815 not spent on utilities and statutory charges in accordance with the amended approved annual budget "had been applied to 'budgetary items' and as far as total actual expense was concerned, had been spent on 'other village expenses'" (Residents' Committee Written submissions par 6).

Respondent's Submissions

1. The Residents Committee submitted that there was no error in the Tribunal's reasoning when it found that Sakkara had not discharged the onus of proof in respect of the matter in s 116(3A)(a) and the audited annual accounts for FY14 did not provide a basis for finding that the $29,815 not expended in accordance with the amended approved annual budget was a variation in expenditure between items in the budget.
2. In its reply to appeal, the Residents Committee also set out, as is permitted, additional bases upon which the making of order 2 of the 25 September 2015 Orders could be supported. In the light of the conclusion we have reached, it is not necessary, however, to record and consider these additional bases.
3. Before turning to consider the submissions of the parties, the Appeal Panel believes it is appropriate to consider whether any concession made by the Residents Committee should be allowed to determine the outcome of this aspect of the appeal.

Should Any Concession by the Respondent Determine the Outcome?

1. The Residents Committee's acknowledgement relied upon by Sakkara should be set out in full. At par 6 of their written submissions, the Residents Committee said: "In opposing this appeal, the Respondent firstly asserts that any fair and reasonable person, based on the evidence provided, could only conclude that the money had been applied to "budgetary items" and, as far as total actual expense was concerned, had been spent on "other village expenses". The Appellant's appeal should thus be viewed as being based purely on a minor technical point about details of how the $29,815 was used, but not denying the accepted fact that clearly the $29,815 was admitted spent on "other village expenses" when it should have been repaid to residents as ordered by Senior Member Coleman."
2. The Residents Committee was at all times clear that they were not accusing Sakkara of dishonesty and that they accepted that all of the $29,815 had been spent on other expenses related to the operation of The Landings. As we understood it, however, the Residents Committee did not intend to make a concession that the $29,815 had all been expended on line items in the amended approved annual budget even though it was accepted that it had been expended on goods or services related to the village. Their position was that the line items in the budget and the different line items in the accounts did not allow a reconciliation so as to determine whether the $29,815 "was a variation in expenditure between items in the approved annual budget" for the purposes of s 116(3A)(a).
3. In these circumstances, it is necessary to examine the amended approved annual budget and the audited annual accounts for FY14 in order to determine whether or not it was possible to discern whether the $29,815 had in fact been expended on other line items in the amended approved annual budget. As it happens, this examination will also be likely to determine the substance of this ground of appeal.

Consideration of the onus discharged ground

1. As set out earlier in these reasons, in early February 2014 Sakkara had requested the residents to approve an increase in the recurrent charges on the basis that such an increase was required primarily to cover anticipated increases in utility and statutory charges, set out in line items 15, 16, 21, 22 and 23 of the annual budget which had already been approved. On 27 February 2014, the residents approved both the increase in the recurrent charges and the amendments to the budget for those line items, as sought by Sakkara. As it turned out, the amount actually expended on utilities and statutory charges in these line items was $29,815 less than budgeted. That sum of $29,815 was not, however, returned to residents but it was, as accepted by both parties on this appeal, expended on other village expenses, thus reducing but not eliminating the deficit incurred by Sakkara in FY14.
2. Having regard to these facts, the Tribunal below held that Sakkara had expended money received by way of recurrent charges (including the increased amount approved in February 2014) otherwise than in accordance with the amended approved annual budget (approved at the same time as the increased recurrent charges) and thus would be in contravention of s 116(3) unless Sakkara could establish each of the matters set out in s 116(3A)(a), (b) and (c).
3. On this appeal, the parties did not dispute that pars (b) and (c) of s 116(3A) had been satisfied. It was apparently accepted by the parties that the failure to spend the $29,815 on utilities and statutory charges in accordance with the amended approved annual budget did not reduce the level of services provided by the retirement village and was not the expenditure which caused the total expenditure provided for by the approved annual budget to be exceeded, as it was in FY14.
4. Thus, the only issue relevantly raised on this appeal was whether or not Sakkara had led evidence to establish that the requirement of par (a), that the variation of $29,815 from what had been budgeted was "a variation in expenditure between items in the approved annual budget", had been met. As has already been explained, Sakkara bore the onus of proving that this requirement in par (a) had been satisfied, if it was to be found not to have contravened s 116(3).
5. The Tribunal below held at [73] that Sakkara "has led no evidence to justify or explain on what line items in the varied approved budget those additional charges were spent". Sakkara's principal point was that this was factually wrong because the audited accounts for FY14 were before the Tribunal and these demonstrated how the recurrent charges, including the $29,815, had actually been spent on "the various items listed in the budget" being "other village expenses".
6. In order to consider whether the audit annual accounts for FY14 upon which Sakkara relies do constitute evidence which could and did establish that the requirement in s 116(3A)(a) had been satisfied, it is important to identify what s 116(3A)(a) requires and what the audited annual accounts should contain. The provision states: "(3A) An operator does not contravene subsection (3) if the expenditure that was otherwise than in accordance with the budget: (a) was a variation in expenditure between items in the approved annual budget, …"
7. In this case, "the expenditure that was otherwise than in accordance with the budget" was relevantly the $29,815 that was not spent on line items 15, 16, 21, 22 or 23 as provided in the amended approved annual budget. The use of the expression "a variation in expenditure between items in the approved annual budget" (emphasis added) means that in order to come within s 116(3A)(a) Sakkara must show that it spent the $29,815 on line items in the amended approved annual budget other than those line items to which it was originally allocated in the budget.
8. It will be a simple matter to demonstrate this if the annual accounts are presented in a layout that corresponds as closely as possible with the layout of the annual budget approved by the residents. If the layout of both the approved annual budget and the audited annual accounts contain, as far as possible, the same line items for expenditure, it should be an easy task to discover whether the expenditure that was otherwise than in accordance with the budget was recorded in the annual accounts as spent on line items in the budget other than those to which it was originally allocated.
9. It is significant to note that the RV Act takes considerable pains to specify the layout and information to be provided to residents in a proposed annual budget and annual accounts. This can be seen as assisting to achieve the object of the RV Act set out in s 3(d), namely "to facilitate resident input, where desired by residents, into the management of retirement villages".
10. In particular, s 112(1) provides that the operator must, prior to the beginning of a financial year, supply residents "with a proposed annual budget itemising the way in which the operator proposes to expend the money to be received by way of recurrent charges" (emphasis added). Similarly, s 114(1) requires the operator to seek the consent of the residents to "the expenditure itemised in the proposed annual budget" (emphasis added) and under s 114(4) the residents must meet, consider and vote on the budget and "if they do not consent to the budget - specify the item or items in the budget to which they object" (emphasis added). If consent is not given and an application is made to the Tribunal the Tribunal can, under s 115(2)(e), make orders which include refusing to allow, decreasing or increasing expenditure "on any particular item in the proposed annual budget" (emphasis added). Clause 17 of the RV Regulation requires the budget to provide "all proposed categories of expenditure (without grouping 2 or more unlike categories)".
11. From this it can be seen that in respect of a proposed budget, the itemisation required must be such that the residents and the Tribunal, if necessary, can understand the nature of the proposed item and consider the appropriateness of the proposed expenditure in respect of that item. Vague, general itemisation would be insufficient.
12. When it comes to the audited annual accounts, s 119(4) of the RV Act specifically provides that "[t]he format of the [audited annual] accounts must correspond as closely as possible with the layout of the proposed annual budget." Given the statutory requirement for itemisation that governs the proposed annual budget and its layout, the RV Act envisages that the audited annual accounts will have, to the maximum extent possible, the same layout, and thus the same line items, as the proposed budget. In this way, residents will be able meaningfully to compare the annual budget that they (or the Tribunal) approved with the audited annual accounts in order to determine whether the operator has in fact expended the money received by way of recurrent charges in accordance with the approved annual budget, as required by s 116(3) and whether any variations are "minor".
13. In the present case, if the audited annual accounts for FY14 had complied with s 119(4), Sakkara should have been able to demonstrate that the $29,815, which was not expended on utilities and statutory charges, was expended on other items that had been approved in the amended annual budget in February 2014, if that was the case.
14. In our opinion, the format of the audited annual accounts for FY14 was not in conformity with s 119(4) in that the format did not correspond as closely as possible, or even moderately closely, with the layout of the amended annual budget approved in February 2014 or the original annual budget for FY14. In particular: 1. In the audited annual accounts, there are no line items numbers. 2. Under the heading "Income", the budget has items 1 to 13 whereas the accounts have, under the heading "Revenue", 7 unnumbered items none of which has exactly the same name as the items in the budget. Nonetheless, it can be assumed that item 1, "Income from Recurrent Charges", and item 3, "Interest Income", in the budget correspond with "Levies: Residents" and "Interest" in the accounts, respectively. Otherwise, it is impossible to determine whether the income items in the budget and the accounts correspond with one another. Only 3 of the income items in the budget have amounts other than "0", whereas all 7 revenue items in the accounts have amounts ranging between $1,250,098 and $468. 3. Under the heading "Expenditure" the budget has 43 items numbered 15 to 57 (although some items such as 20, 24, 37, 40 and 44 appear to be category headings). Under the heading "Expenses" the audited annual accounts have 55 unnumbered items, arranged into 14 categories (Staffing, Administration, Ground Maintenance, Communication Services, Building Repairs and Maintenance, Legislative Requirement Cost, Energy, Council Water Rates and Waste Disposal, Vehicles, Elevators, Emergency Call Services, Air Conditioning, Swimming Pool and Other (Club House)). These categories do not generally correspond with the categories in the budget. Some of the items in the budget can be assumed, based on their descriptions, to correspond with items in the accounts. For example: Item in Budget (No.) Item in Accounts Council Rates 15 Council Insurance 16 Insurances Waste/Rubbish Removal 17 Waste Disposal Pest Control 18 Pest Control Water Charges 21 Water Gas 22 Gas Electricity 23 Electricity Tradesman Repairs 32 Tradesman Repairs Security/ Safety Report 35 Security and Safety Audit Audit Fees 45 Audit fees Subscriptions 48 Newspapers and subscriptions Resident Committee Expenses 49 Resident committee expenses

1. As a result of the correspondence between items 15, 16, 21, 22 and 23 in the budget and the similarly named items in the accounts, it was possible to determine that $29,815 had not been actually been spent on the utilities and statutory charges as set out in those budgeted line items. Apart from the 12 items identified in the table above, however, there is no obvious correspondence between the items in the budget and the items in the accounts. For example, in respect of the item in the annual accounts called "Foxtel payments" there is no corresponding item in the approved budget.
2. Since the layout and descriptions of the items in the audited annual accounts do not correspond with the layout and items in the amended annual budget as approved by the residents, apart from the 12 items identified in the table above, it is not possible to determine whether the expenditure recorded in the audited annual accounts was spent only on items contained in the amended annual budget as approved. Consequently, it is not possible to determine from the audited annual accounts whether the $29,815 that was not spent on utilities and statutory charges, was spent on other line items in the approved budget.
3. In the light of the specific wording of s 116(3A)(a), it is not sufficient in order to satisfy the requirement in that paragraph for Sakkara to prove that all the recurrent charges were spent on matters related to The Landings. If the $29,815 was not spent on items in the amended approved annual budget but on paying for other goods or services, albeit related to the retirement village, it could not be concluded that the $29,815 was "a variation in expenditure between items in the approved annual budget" (emphasis added).
4. In this case, if it was to discharge the onus on it, Sakkara had to adduce evidence to prove that the recurrent charges, including the $29,815, were spent on "items in the … budget" approved in accordance with Div 5 of Pt 7 of the Act. The audited annual accounts, principally because their layout does not correspond with the layout and items in the amended approved annual budget, did not establish that the recurrent charges were expended only on items listed in that budget.
5. From this it follows that the Tribunal below made no error in finding that Sakkara "led no evidence to justify or explain on what line items in the varied approved budget those additional charges [namely the $29,815] were spent" (emphasis added).
6. This analysis also provides a compelling reason why the Appeal Panel should not accept that the Residents Committee could and did concede on a properly informed basis that the $29,815 was expended on items in the amended approved annual budget other than items 15, 16, 21, 22 and 23. From the audited annual accounts it is not possible to tell whether the $29,815 was spent on other items in the approved budget or on other goods and services related to the village.
7. For these reasons, the appeal in so far as it is based on the onus discharged ground should be dismissed.
8. It does not follow from what has been said above, however, that Sakkara could not have discharged the onus of proof in the present case even given the lack of correspondence in layout and items between the amended approved annual budget and the audited annual accounts. The onus in respect of s 116(3A)(a) might be able to be discharged if expert accounting evidence, analysing the expenses in the accounts and the line items in the budget, could establish that all expenses were spent on line items contained in the approved budget. If evidence to this effect were led, it might be open to the Tribunal to conclude that the $29,815, being expenditure otherwise than in accordance with the budget, was a variation in expenditure between line items in the approved amended annual budget falling within s 116(3A). However, there was no such evidence before the Tribunal below.
9. If Sakkara had complied with s 119(4) of the RV Act, the difficulty with discharging the onus of proof in respect of s 116(3A)(a) may well not have arisen in this case.

Conclusion on Appeal in relation to Order 2 of the September 2015 Orders

1. On the bases set out above, the Appeal Panel concludes that the appeal in relation to order 2 of the September 2015 Orders should be dismissed.

Additional Matters Raised by Sakkara in relation to Order 2 of the 25 September 2015 Orders

1. For the sake of completeness, we shall also address a number of points made by Sakkara in its written submission even though they do not appear to us strictly to have been the subject of this appeal.
2. In its written submissions (par 50), Sakkara criticised the reasoning of the Tribunal at first instance in relation to order 2 on the ground of the lack of "any reflection on whether the $29,815 was a 'minor variation' (which, at 2.2 per cent of the total budget, could fairly be said to be the case)". This does not appear to fall within any of the grounds of appeal as formulated by Sakkara in its notice of appeal. Nor were we taken to any material that indicated that this argument was raised below. Further, the way in which the submission was put suggests that it was not, in fact, raised below. It was not submitted that the Tribunal at first instance erred by rejecting an argument that the $29,815 discrepancy was a "minor variation" within s 116(3). Rather, this proposition was merely described as being something "which … could fairly be said to be the case". This issue was not raised in oral submissions before the Appeal Panel by Sakkara. Consequently, we would not uphold the appeal on the basis of this criticism of the reasoning of the Tribunal below. Further, to the extent that the question of whether a sum of almost $30,000 amounts to a "minor variation" for the purposes of s 116(3) raises a question of fact or mixed fact and law, leave to appeal would be required under s 80(2)(b). Having regard to the restrictions on the grant of leave imposed by cl 12(1) of Sch 4 to the Act, the Appeal Panel is not satisfied that there might have been a substantial miscarriage of justice on one or more of the grounds referred to in cl 12(1)(a), (b) or (c) and we would not grant leave to appeal in respect of such a criticism even if it had been raised as a ground of appeal. To the extent that it can be said to raise a question of law, we would conclude that a variation of almost $30,000, even if it only amounts to 2.2 per cent of the total budget, could be held not to be "minor" within the meaning of s 116(3) in that it was a substantial percentage of the total amount for each of the relevant line items which were not triflingly small. This conclusion is also supported when subs (3) is considered in the light of subs (3A) and the other provisions of the RV Act, for example, those concerning recurrent charges, budgets and expenditure and the treatment of deficits and surpluses. In particular, an indication of what might be "minor" in the context of the RV legislation is found in cl 20 of the RV Regulation which specifies that "contingencies" which may be included, under s 115A of the RV Act, in a proposed annual budget is limited to $100. For all of these reasons, the Appeal Panel would not uphold the appeal on this basis, even if it were properly raised as a ground of appeal.
3. In that same par 50 of Sakkara's written submissions, the statement is also made "[t]here was also no reflection on whether the tribunal should exercise its discretion not to order a refund because the residents benefitted generally from the expenditure (s 116(4))". Once again, this does not appear to fall within any of the grounds of appeal as formulated by Sakkara in its notice of appeal. Nor were we taken to any material that indicated that this argument was raised below. As we understand it, there was no dispute that if Sakkara was found to have contravened s 116(3), the Tribunal had a discretion to order a refund, under s 116(4). Apart from the criticism that there was "no reflection on whether the tribunal should exercise its discretion", no submissions have been made by Sakkara that the discretion miscarried in some way which would allow the Appeal Panel to intervene in accordance with the principles in House v The King [1936] HCA 40; (1936) 55 CLR 499. Furthermore, this issue was not raised in oral submissions by Sakkara before us. The material contained in annexure A to the Residents Committee's reply to appeal pars 1 - 5 could be seen as sufficient reasons supporting the Tribunal's conclusion in exercise of its discretion, if that were required. Again, in all the circumstances, the Appeal Panel would not uphold the appeal on this basis, even if this criticism had been properly raised as a ground of appeal.

Appeal against Orders 4, 5 and 6 of the September 2015 Orders

1. Sakkara's grounds of appeal in respect of orders 4, 5 and 6 of the 25 September 2015 Orders are (as described above): 1. The question not before the Tribunal ground; 2. The impermissible treatment of a "net surplus" ground; and 3. The misapprehension concerning the recurrent charges in the FY12 and FY13 accounts ground.
2. It appears to the Appeal Panel that, although it is the last ground of appeal raised in relation to orders 4, 5 and 6, the misapprehension concerning the recurrent charges in the FY12 and FY13 accounts ground goes to the heart of the appeal concerning these orders. For this reason, we shall deal with it first. Before doing so, however, it is useful to be reminded of the background to orders 4, 5 and 6.

Background to Orders 4, 5 and 6

1. Apart from the issue concerning the basis upon which the accounts had been prepared which is the subject of the last ground, the misapprehension concerning the recurrent charges in the FY12 and FY13 accounts ground, there was no significant dispute as to the facts relevant to the appeal relating to orders 4, 5 and 6.
2. As noted above, on 14 November 2014, Senior Member Bordon had made orders fixing the recurrent charges under s 108, establishing the annual budget under s 115 of the RV Act and requiring the preparation of audited accounts, for FY12 and FY13. The relevant orders were: "59. In proceedings RV 11/2923 in relation to the proposed budget for the financial year 2012 the following orders will be made:- (a) Pursuant to section 108 an order that the recurrent charges be the monthly levy of $574.40. (b) Pursuant to section 115 the Tribunal's approved budget be in the form of expenditure for a total amount of $1,325,721 in the form annexed as Annexure A. (c) The operator is to undertake an audit of the approved budget and accounts for the 2011/2012 financial year in accordance with these orders and earlier CTTT findings and is to fund the cost of this. … 60. In proceedings RV 12/32770 in relation to the proposed budgets for the financial year end of 2013 the Tribunal orders: (a) Pursuant to section 108 recurrent charges for the financial year be a monthly levy of $504.23. (b) Pursuant to section 115, the approved budget be in form of expenditure for the financial year for a total $1,246,456 in the form annexed B in the column headed "Budget after CTTT Deductions". (c) That the operator is to undertake an audit by its current auditor of the approved budget and revised accounts for the 2012/2013 financial year within 28 days in accordance with these orders and earlier CTTT findings and the operator is to fund this cost." …

• The Residents Committee, The Landings v Sakkara Investment Holdings Pty Ltd ATF Sakkara Landings Trust [2014] NSWCATCD 228 at [59] and [60].

1. These orders were made well after the end of FY12 and FY13. As noted above, during those financial years, Sakkara had collected recurrent charges and had expended money on the operation of the village. These arrangements were, however, necessarily tentative in that there were applications pending in the CTTT during those years concerning the setting of both the budget and the recurrent charges for those years. The November 2014 Orders can be understood to have been intended, at least in part, to regularise and finalise the recurrent charges and budget for FY12 and FY13 and allow any deficit or surplus for those years to be calculated and then dealt with in accordance with the RV Act.
2. In the November 2014 Orders, the recurrent charges for each of FY12 and FY13 were apparently calculated by dividing the budgeted expenditure, ordered or approved by the Tribunal in par (b) of the relevant order in each case, by a divisor which was an approximation of the number of residents liable to pay recurrent charges: 192 for FY12 and 206 for FY13. The divisor can only have been an approximation as residents came and went during those years and some of the residents would only have been liable to pay the recurrent charges for part of each relevant year. As a consequence, it would be anticipated that the income by way of recurrent charges which residents were actually liable to pay would not be exactly equal to the budgeted expenditure for the relevant year, despite the method of calculation of the recurrent charges.
3. The audited accounts, required to be prepared by the November 2014 Orders, were produced on 16 March 2015 and showed that: 1. for FY12, there was a surplus of income over expenditure of $79,764; 2. for FY13, there was a deficit of income over expenditure of $14,047.
4. In May 2015, Sakkara issued invoices to those liable to pay recurrent charges for the difference between the recurrent charges previously invoiced for FY12 and FY13, on the tentative basis referred to above, and the recurrent charges set by Senior Member Bordon in the November 2014 Orders for those financial years.
5. Finally, it was not in dispute on this appeal that Sakkara had made good the deficit $14,047 for FY13, as required by s 120C of the RV Act. Further, as to the following financial year, FY14, it was also not in dispute that the deficit of $111,914 for FY14 had also been made good by Sakkara.
6. The Tribunal below formulated the relevant issue arising out of these facts and the Residents Committee's claim, at [100] of its reasons, as follows: "Issue 5: Make good of accrued deficit for FY14. The nature of the claim 100. The final issue concerns the applicant's assertion that the respondent is required to make good into the village operating account accumulated deficits for F12 and FY 13 the sum of $73,332.00. The respondent [Sakkara] refers to this as the "Prior Years Deficit Claim"."
7. It is not entirely clear how this issue, as formulated, arose out of the relevant facts or gave rise to orders 4, 5 and 6.
8. Nonetheless, the Residents Committee's submissions (recorded at [101]) indicate that it was argued in this context that for Sakkara "to issue invoices to residents for additional amounts for recurrent charges for historical budget years FY12 and FY13 [was] impermissible". From orders 4, 5 and 6, it is clear that the Tribunal below accepted that submission.
9. Orders 4, 5 and 6 of the 25 September 2015 Orders were as follows: "4 Order that within 21 days of the date of these orders [Sakkara] have prepared an audited report of the FY14 accounts to take account of the net surplus of $65,717.00 as disclosed in the final audit reports of the accounts of FY12 and FY 13 dated 16 March 2015 and that the respondent bear the cost of such report and if that report shows a deficit order that within 7 days of receipt of that report, the respondent make good any such deficit. If the report discloses a surplus, the surplus is to be dealt with in accordance with s 120B of the RV Act. 5 Order that the respondent withdraw all invoices issued by it in May 2015 to any resident, past or present, seeking to recover additional recurrent charges as a result of the audit reports of the accounts for FY12 and FY13 dated 16 March 2015 and that the respondent not issue to any other resident any invoice for recurrent charges for those years. 6 Order that within 7 days of the date of these orders the respondent repay to any resident, past or present, any amount paid by such resident purportedly in compliance with any invoice referred to in order 5 above."
10. Of these orders, order 5 is the primary order and order 6 is dependent upon it. Whether order 4 is appropriate or necessary should be considered after orders 5 and 6 have been dealt with.
11. The Tribunal's reasons for making order 5, and consequential order 6, were as follows: 1. The Tribunal rejected (at [122] of its reasons) the following conclusions of Ms Lawrence, the acting Village Manager of The Landings, that: 1. the audited accounts for FY12 and FY13 disclosed that Sakkara "- operating without the benefit of approved budgets - collected a lower sum of levies than it was entitled to collect under the orders in respect of the [proceedings 11/29123] and [proceedings 12/32770]" (at [120]); 2. "the residents of the village have to pay additional amounts by way of recurrent charges for both years" (at 121]), 1. The reasons for the Tribunal's rejection of those conclusions were that Ms Lawrence: 1. did "not explain no[r] give any detail of what was charged to the residents, what she conclude[d] the final re-audited budgets 'allow' the respondent to have charged the residents by way of recurrent charges, nor whether there has been an actual shortfall in the recurrent charges levied to the actual expenditure incurred" (at [120]); 2. did not explain why the residents have to pay additional amounts by way of recurrent charges or the amounts that each or any resident must pay (at [121]); 3. did not take into account the fact that the actual expenditure (as reflected in the re-audited accounts) is significantly less than the approved budgeted expenditure (at [122]); 4. did not give "adequate evidence of the levies for recurrent charges incurred (based upon the proposed budgets) as against the actual expenditure incurred (based upon the audit of the Tribunal approved budgets) so that a finding could be made as to whether there could be an additional levy for recurrent charges or a variation of the recurrent charges already levied" (at [127]). 1. In making the November 2014 Orders Senior Member Bordon did not envisage "that further levies would be imposed on the residents for recurrent charges for the budget years already passed. I would have expected if that was his intention, this would have been made clear both in his reasons and in his orders." (at [126]); 2. As there was a surplus for FY12 there was no basis for Sakkara to seek additional recurrent charges for that year from residents and as there was a deficit for FY13, such a deficit could not be recovered from the residents, see s 120C (at 129]); 3. "There is a net surplus for those two years of $65,717 based upon the actual income and expenditure of those two years. The rendering of invoices for additional recurrent charges to match the approved budgeted income reflected in the orders of Senior Member Bordon of 14 November 2014 would only increase that surplus because the actual income would increase by the amount so levied, but the actual expenditure would remain the same." (at [130]).

The Misapprehension concerning the Recurrent Charges in the FY12 and FY13 Accounts Ground

1. Sakkara sought leave to appeal in respect of this ground on the basis that it was not limited to a question of law but rather raised the issue of whether the Tribunal below had erred in fact. The error of fact was said to be, in effect, that the Tribunal had misapprehended the basis upon which the audited accounts for FY12 and FY13, provided in accordance with November 2014 Orders, had been prepared. It was submitted that leave should be granted since Sakkara may have suffered a substantial miscarriage of justice, for the purposes of cl 12 of Sch 4 to the Act, because the decision was against the weight of the evidence (see annexure C to the notice of appeal).
2. The principles that apply in relation to the granting of leave to appeal under cl 12 of Sch 4 to the Act have already been set out above.
3. As the Appeal Panel understands it, Sakkara argues that the finding at [130] by the Tribunal below involves a fundamental misunderstanding of the basis upon the accounts for FY12 and FY13 were prepared. At [130] the Tribunal held: "There is a net surplus for those two years of $65,717 based upon the actual income and expenditure of those two years." (emphasis added)
4. The so called "net surplus" of $65,717 was the result of the Tribunal below subtracting the deficit of $14,047 for FY13 from the surplus of $79,764 for FY12. The error was said to be that the audited accounts provided on 16 March 2015 from which those figures were derived were not based on income invoiced and collected, but rather on income invoiced, including recurrent charges invoiced in May 2015 in consequence of the recurrent charges for each of the relevant years set by Senior Member Bordon in the November 2014 orders, whether or not collected. That is, income in the audited accounts had been accounted for on an accruals basis rather than a "cash received" basis. For this reason, it was said to be entirely incorrect to conclude, as the Tribunal below did at [130], that "The rendering of invoices for additional recurrent charges to match the approved budgeted income reflected in the orders of Senior Member Bordon of 14 November 2014 would only increase that surplus because the actual income would increase by the amount so levied, but the actual expenditure would remain the same."
5. If Sakkara is correct, the Tribunal at first instance proceeded upon a misapprehension as to the basis upon which the audited accounts for FY12 and FY13 were prepared. Thus, it could be said that the Tribunal's finding that the accounts were based upon "actual income" was in the relevant sense against the weight of the evidence.
6. Further, if Sakkara's contention in this regard is correct, the circumstances can be characterised as a failure in the way a matter was conducted or decided which deprived Sakkara of a chance that was fairly open of achieving a better outcome than occurred.
7. In the circumstances of this case, in order to determine whether the Tribunal below did misapprehend the basis upon the accounts were prepared and consequently reached a factually incorrect conclusion as to the effect of "rendering of invoices for additional recurrent charges to match the approved budgeted income reflected in the orders of Senior Member Bordon of 14 November 2014" it is necessary to consider the basis upon which the audited accounts for FY12 and FY13 were in fact prepared. The Appeal Panel observes in this regard in Note 1 to each set of audited accounts there is a statement that they were prepared "on an accruals basis" and also a more specific statement as to basis upon which revenue from recurrent charges was recognised in the accounts.
8. Having regard to these arguments and this material, the Appeal Panel accepts that Sakkara might have suffered a substantial miscarriage of justice because the decision was against the weight of the evidence. Consequently, the Appeal Panel may, under cl 12 of Sch 4, grant leave to appeal.
9. Further, the Appeal Panel believes that it is appropriate to exercise its discretion in favour of granting leave to appeal in respect of this ground, having regard to the principles set out earlier in these reasons, as the matter involves a question of whether there was a factual error that was unreasonably arrived at and clearly mistaken which is more than merely arguable, especially in the light of Note 1 to the accounts.
10. Accordingly, the Appeal Panel grants leave to Sakkara to appeal in respect of orders 4, 5 and 6 of the September 2015 Orders.

Appellant's Submissions

1. Sakkara submitted in respect of this ground of appeal that the Tribunal below made orders 4, 5 and 6 on the basis of a number of incorrect findings of fact or misapprehensions in relation to the audited accounts for FY12 and FY13, namely: 1. The misapprehension that the recurrent charges recorded in those accounts represented amounts that had been actually collected by Sakkara, when in fact: 1. those recurrent charges were the amount of recurrent charges determined for each relevant financial year in the November 2014 Orders whether or not they had been collected; 1. the misapprehension that if Sakkara collected the recurrent charges which it sought to invoice in May 2015, it would be collecting recurrent charges in addition to those recorded in the audited accounts and it would lead to a greater surplus for FY12 and be an impermissible attempt to make good the deficit for FY13 from recurrent charges, when, in fact, if Sakkara was not permitted to collect the recurrent charges invoiced in May 2015: 1. the surplus in FY12 of $79,764 would not exist and there would be a deficit of $34,910; and 2. the deficit in FY13 would not be $14,047 but would be $62,930.
2. From the figures in the preceding paragraph, from the figures in par 61 of Sakkara's written submissions and from the table attached to those submissions, it is apparent that the recurrent charges which were invoiced in May 2015 and which are affected by order 5 of the September 2015 Orders are said to amount to $163,557 in total being: 1. $114,674 for FY12; and 2. $48,883 for FY13.
3. As to the evidence to support these submissions, Sakkara relied upon the audited accounts and, in particular, the statements contained in Note 1 to each set of audited accounts that they were relevantly prepared "on an accruals basis".
4. In addition, Sakkara relied a comments made on behalf of the Residents Committee at the hearing in the Tribunal below which were consistent with Note 1 and were in the following terms: "The audits that were produced pursuant to those orders [Senior Member Bordon's orders for the preparation of audited accounts for FY12 and FY13 made in November 2014] booked revenue for those years relating to unrecovered recurrent charges." [Transcript 25 June 2015 p 6 lines 25 - 26]
5. It was then submitted that order 5 of the September 2015 Orders requiring Sakkara to withdraw the invoices issued in May 2015 for the amount of the recurrent charges determined by the November 2014 Orders but not collected prior to May 2015 subverted the November 2014 Orders and created a windfall for the residents. This windfall was said to occur because Sakkara had made good the deficit $14,047 for FY13 and the deficit of $111,914 for FY14 as required by s 120C of the RV Act and would be required to abide by the residents' decision under s 120B(1) in relation to the surplus of $79,764 for FY12 yet the residents would not be required to pay all of the recurrent charges which produced the surplus of $79,764 for FY12 and a deficit limited to $14,047 for FY13.

Respondent's Submissions

1. The Residents Committee submitted that if Sakkara were successful and order 5 was set aside, this would involve a breach of s 120C(2)(b), (c) and (d) in that it would involve Sakkara requesting payment from the residents to make good a deficit, increasing recurrent charges to make good a deficit or using the whole or part of the recurrent charges collected by the operator in a financial year to make good a deficit.
2. It was also submitted in effect that the November 2014 Orders did not specifically allow Sakkara to "issue back-levy invoices … to certain residents who were living in the village in FY12 and FY13" and: "In fact, to the contrary, Senior Member Bordon did not appear to contemplate such a radical action by including in his Reasons for Decision these words "It may be that there is little practical utility in now making budget orders; nevertheless for the sake of finality I shall do so. (Paragraph 54 of Senor Member Bordon's Reasons for Decision 14 November 2014). The thrust of those words were later supported by similar words expressed by the Hon Justice Sackar in Supreme Court matter 2013/382710 on 19 May 2014 …"
3. The Residents Committee also submitted that all the charges related to "expired budgets" and "when a financial year is over, any budget must be dead". It was also said in relation to the question of whether the residents would receive a windfall if order 5 of the September 2015 Orders was allowed to stand "which rightly returns the status quo as that existed on 30 June 2013. This is logical because only actual expenses and actual income remain relevant after any year's end, not a budget which has, by then, expired."
4. The Residents Committee denied that there was a windfall to residents if order 5 was set aside.
5. The submission was also made that the conclusion of the Tribunal below that the "net surplus" had resulted from "actual income and expenditure" was acceptable "without any statements to the contrary being placed before him with in the Appellant's evidenced audited accounts". It was said that Sakkara had failed to established that: 1. there was any misunderstanding as to the nature and effect of the November 2014 Order; 2. there were any erroneous findings about "the actual levies collected" and "the amount of levies payable by residents"; 3. the audited accounts did not support the conclusions of the Tribunal below.
6. Consequently, the Residents Committee submitted that order 5, and the consequential orders 4 and 6, should not be set aside.

Consideration of the Misapprehension concerning the Recurrent Charges in the FY12 and FY13 Accounts Ground

1. The primary reasoning which led the Tribunal at first instance to make order 5 involved the following steps (see [129] and [130] of the reasons for decision below): 1. the audited accounts for FY12 and FY13 were based on "actual income and expenditure for those two years"; 2. the audited accounts showed that at the end of FY13 there was a "net surplus" of $65,717; 3. "rendering of invoices for additional recurrent charges to match the approved budgeted income reflected in the orders of Senior Member Bordon of 14 November 2014 would only increase that surplus because the actual income would increase by the amount so levied, but the actual expenditure would remain the same"; 4. since there is a surplus for those two years, there is no basis for Sakkara to seek additional recurrent charges for those years.
2. From the above, it is clear that the Tribunal below was proceeding on the misunderstanding that the income by way of recurrent charges recorded in the audited accounts for FY12 and FY13 did not include the additional recurrent charges that arose from the increase effectively allowed by the 14 November Orders and which were the subject of the invoices issued in May 2015.
3. A review of Note 1 to both sets of accounts demonstrates that fact. In that note there is a statement that the accounts were prepared "on an accruals basis" and also statements as follows: "Revenue Revenue from recurrent charges and telephone services are recognised on an accruals basis. Resident Levies have been calculated and determined in accordance with the NSW Civil and Administrative Tribunal orders made by Member Bordon on 14 November 2014. … Events subsequent to balance date There are currently claims and counter claims before the NSW Civil and Administrative Tribunal involving the operator and residents. As at the date of this report, it is not possible to quantify the effects of these cases on the recurrent charges."
4. It can be accepted for present purposes that income which is recognised on an accruals basis is to be accounted for when the obligation to pay the amount of the income arises rather than when the payment is received. Such an approach is consistent with the way in which income on an accruals basis has been treated by the Courts in numerous cases: see for example Leighton v Commissioner of Taxation [2011] FCAFC 96 at 17, J Rowe & Son Pty Ltd v Federal Commissioner of Taxation [1971] HCA 80; (1970) 124 CLR 421 at 452 and Henderson v Federal Commissioner of Taxation [1970] HCA 62; (1970) 119 CLR 612.
5. On this appeal, we were not taken to any evidence or other material which would suggest that Note 1 to each set of audited accounts was incorrect as to the basis upon which the accounts had been prepared. Nor was it suggested that recognising income on an accruals basis, in this case, had a different meaning from that explained in the preceding paragraph.
6. Indeed, the audited accounts for both years indicate that there may well be substantial uncollected recurrent charges. In the statement of assets and liabilities in each case, "Current Assets" include "Trade and other receivables". In Note 3 to each set of accounts, it is stated these trade and other receivables include "Accounts receivable" of $241,410 for FY12 and $239,466 for FY13. As the recurrent charges constitute the overwhelming majority of the income, it is likely that these accounts receivable are largely or entirely uncollected recurrent charges.
7. In the present case, the fact that the amounts had not been invoiced at the time the audited annual accounts were prepared did not prevent the accrual of the income. This is because there was an obligation on each resident to pay the amount of the increase upon the making of the order in November 2014. But even if the amounts should first have been invoiced, before being taken up on an accruals basis, the income recorded in the accounts from which the respective surplus and deficit were calculated included the sums invoiced in May 2015.
8. Having regard to these matters, the Appeal Panel is satisfied that: 1. the audited accounts for FY12 and FY13 were prepared on an accruals basis generally and, in particular, revenue from recurrent charges was recognised on an accruals basis; 2. the income from recurrent charges recorded in both sets of accounts included recurrent charges payable by residents in consequence of the November 2014 Orders; and 3. the income by way of recurrent charges recorded in those accounts comprised the recurrent charges which were payable by the relevant residents and recoverable by Sakkara in accordance with the November 2014 Orders in each relevant year, whether or not it had in fact been collected.
9. It follows from this that the Tribunal at first instance was wrong to conclude, as it effectively did at [130], that: 1. the income recorded in accounts for FY12 and FY13 as "Levies: Residents" was the amount of recurrent charges actually collected by Sakkara in each relevant year; and, 2. rendering invoices in May 2015 for additional recurrent charges to match the recurrent charges set in the November 2014 Orders would only increase the "net surplus" of $65,717 for FY12 and FY13.
10. Invoicing relevant residents for recurrent charges which had not already been invoiced for those two years would not increase the surplus for FY12 nor would it reduce the deficit for FY13, which, as it happens, has already been made good.
11. Once it is accepted that the audited accounts for FY12 and FY13 were prepared on an accruals basis, it can also be seen that setting order 5 of the September 2015 Orders aside would not involve any contravention of s 120C(2)(b), (c) or (d). Sakkara's invoicing the residents in May 2015 for uninvoiced recurrent charges that it was entitled to recover under the November 2014 Orders would not amount to a request to residents for a special additional payment for the purpose of making good a deficit, within s 120C(2)(b), or using recurrent charges to make good a deficit, within s 120C(2)(d), since the deficit in FY13 was calculated taking into account recurrent charges that Sakkara was entitled to recover under the November 2014 Orders and that deficit has already been made good. Further, given that the recurrent charges sought to be collected by the invoices issued in May 2015 were those which Sakkara was entitled to recover under the November 2014 Orders but had not already invoiced or collected, Sakkara cannot be said to have "increased recurrent charges for the purpose of making good a deficit", within s 120C(2)(c).
12. Whilst it is unfortunate that because of the number and complexity of the various proceedings brought by the parties in relation to the financial affairs of The Landings the budgeted expenditure and recurrent charges for FY12 and FY13 were not determined until the Tribunal made the November 2014 Orders, those orders cannot be regarded as "expired", of no "practical utility" or of no effect simply because the financial years to which they related were passed. Those orders of the Tribunal, in so far as they set the recurrent charges, served to establish the overwhelming majority of the income which determined whether or not there was a surplus or deficit in the relevant year. Whether there was a deficit or surplus in the relevant years had and has consequences. The deficit for FY13 had to be made good by Sakkara in accordance with 120C(1) and this has occurred. The surplus for FY12 has yet to be dealt with under s 120B(1). If order 5 of the September 2015 Orders were allowed to stand, it would effectively set aside, at least in part, the orders of Senior Member Borden which were not the subject of any appeal and it would prevent the operator from collecting recurrent charges (including that part of the recurrent charges constituting an increase from the previous year) to which the operator was entitled. The fact that there was a surplus does not alter the position nor does the fact the disputes took so long to be resolved, not least because of the various challenges that were made in the circumstances outlined above.
13. The Appeal Panel should also address the comments made by the Tribunal below at [120] - [122] and [127] concerning the inadequacy of Sakkara's evidence to support the conclusions that: 1. the audited accounts for FY12 and FY13 disclosed that Sakkara "- operating without the benefit of approved budgets - collected a lower sum of levies than it was entitled to collect under the orders in respect of the [proceedings 11/29123] and [proceedings 12/32770]" (at [120]); 2. "the residents of the village have to pay additional amounts by way of recurrent charges for both years" (at 121]).
14. For the reasons which have been given above, in our view, Sakkara is entitled to invoice residents liable to pay recurrent fees in FY12 and FY13 for additional recurrent charges calculated in accordance with the November 2014 Orders and not already invoiced as at May 2015. Whilst neither the Appeal Panel nor the Tribunal at first instance was provided with evidence of what was invoiced to individual residents, the statements made in the audited accounts and the evidence concerning the May invoices was sufficient for the Appeal Panel to conclude for present purposes that the total of the invoiced amounts represented that part of the total recurrent charges for each of FY12 and FY13 payable in consequence of the November 2014 orders that had not otherwise been invoiced and which the operator was entitled to invoice the relevant residents.
15. Consequently, the Appeal Panel does not accept that this lack of information was a sound basis making orders 5 or 6 of the September 2015 Orders.

Conclusion on the Misapprehension concerning the Recurrent Charges in the FY12 and FY13 Accounts Ground

1. For the reasons set out above, the Appeal Panel is of the view that the Tribunal at first instance made order 5 of the September 2015 Orders under a misapprehension as to the basis upon which the audited accounts for FY12 and FY13 were prepared and, consequently, there was no proper basis for making order 5. Thus, the appeal in respect of order 5 should be allowed and that order set aside. As a result, Sakkara would be free to pursue recovery of the amounts properly invoiced in May 2015.
2. Order 6 of the September 2015 requires Sakkara to repay any recurrent charges collected as a result of the May 2015 invoices. This order is effectively consequential upon order 5 and should be set aside for the same reasons as order 5 was set aside.
3. Finally, order 4 of the September 2015 Orders requires Sakkara to prepare an audited report of the FY14 accounts to take account of the net surplus of $65,717 as disclosed in the final audit reports of the accounts of FY12 and FY13 and, if that report shows a deficit, Sakkara is to make good any such deficit or, if the report discloses a surplus, the surplus is to be dealt with in accordance with s 120B of the RV Act. It appears to the Appeal Panel that this order is inappropriate for a number of reasons. First, it incorrectly assumes that a surplus from one year can be set off against a deficit from the succeeding year, contrary to the scheme of the RV Act which relevantly requires that: 1. any surplus for each financial year must be dealt with as provided in s120B; and 2. any deficit for each financial year must be made good by the operator under s120C
4. Secondly, it fails to take into account that the deficit of $14,047 for FY13 has already been made good.
5. Thirdly, in respect of the surplus of $79,764 for FY12, this surplus is required be dealt with under s 120B(1) and no order of the Tribunal is required to effectuate this. Sakkara or the Residents Committee can take steps under s 120B(2), if they so desire.
6. For these reasons the Appeal Panel also proposes to set aside order 4 of the Orders of September 2015.

Conclusion on Appeal in relation to Orders 4, 5 and 6 of the September 2015 Orders

1. In the light of the Appeal Panel's reasoning and conclusions based upon the misapprehension concerning the recurrent charges in the FY12 and FY13 accounts ground in relation to orders 4, 5 and 6, it is not necessary for the Appeal Panel to consider any further the other grounds of appeal relied upon by Sakkara.
2. It also follows that the appeal in relation to orders 4, 5 and 6 of the September 2015 Orders should be allowed and those orders should be set aside. Given the nature of those orders and the bases upon which they were set aside, there is no need to make any other orders in substitution for those orders.

Additional Comments

1. Given the protracted history of applications to the Tribunal which are either directly or indirectly relevant to this appeal, the Appeal Panel considers it appropriate to make some additional comments, although they may not be necessary to dispose of this appeal.
2. First, it is clear from what we have said that some of the disputes between the parties could have been minimised or avoided if the information required in relation to the proposed budget and the audited annual accounts had been provided on a timely basis and in the form required by the RV Act and the RV Regulation. We have referred to the relevant provisions in some detail above.
3. Secondly, since the residents and Sakkara must interact with each other in relation to the continuing operation of The Landings, it is appropriate for the parties to provide information and co-operation in their dealings with one another so that: 1. residents can, if they desire, have properly informed input into the management of their retirement village (see s 3(d) of the RV Act); and 2. it can be seen that the manager is adopting best practice management standards (see s 3(f) of the RV Act).

Conclusion on Orders to be Made

1. Leave to appeal against orders 4, 5 and 6 of the September 2015 Orders will be granted.
2. Since there was no appeal against orders 1, 3, 7 and 8 of the September 2015 Orders and the appeal against order 2 is to be dismissed, those orders should stand. The appeal against orders 4, 5 and 6 will be allowed and those orders set aside. Although a stay of order 4 was granted "until further order of the Tribunal" by the Appeal Panel on 20 October 2015, the stay of that order will cease to be operative on the setting aside of the underlying order and on the final determination of the appeal, Young v Hones (No 4) [2015] NSWSC 792 at [11] to [14].
3. A stay of orders 2, 3, 4, 5 and 6 of the September 2015 Orders was referred to in the notice of appeal filed by Sakkara. From the directions and orders made by the Appeal Panel at the callover on 20 October 2015, it appears that a stay was only granted in relation to order 4. To the extent that, contrary to our understanding, a stay pending appeal was granted in respect of orders 2, 3, 5 or 6 it would also cease to be operative on the final determination of the appeal, Young v Hones (No 4) [2015] NSWSC 792 at [11] to [14].

Costs

1. In its reply to appeal the Residents Committee has sought an order for costs of the appeal under s 60(2) of the Act. Section 60 provides: "60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section: costs includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal."
2. As is clear from par 33 of the Residents Committee's written submissions dated 19 November 2015, its costs application was contingent upon the Residents Committee being entirely successful on the appeal. At par 33 it was stated: "If the [Residents Committee] is successful in its submission requesting that this appeal should be dismissed then the [Residents Committee] claims all legal and accounting expert's advisory costs associated with defending its position within this appeal. …"
3. Whilst the Residents Committee was successful in defending the appeal in respect of order 2, it was unsuccessful in relation to the appeal against orders 4, 5 and 6. Accordingly, as we understand it, the Residents Committee does not seek its costs of the appeal and we need consider the matter of costs no further.
4. Even if we are wrong and the Residents Committee does seek an order for costs we would not make an order in the present case for the reasons which follow.
5. As this was an appeal lodged before 1 January 2016, r 38A of the Civil and Administrative Tribunal Rules 2014 (the Rules) does not apply. Consequently, r 38 of the Rules which is applicable only to proceedings in the Consumer and Commercial Division and not to an appeal before the Appeal Panel has no application and costs fall to be dealt with under s 60 of the Act, see for example Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120. The general position under s 60 is that each party is to bear its own costs, s 60(1). Notwithstanding this, the Tribunal (including the Appeal Panel) may award costs but only if it is satisfied that there are special circumstances warranting such an award, s 60(2). In this context "special circumstances" should be taken to refer to circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional, see Cripps v G & M Mawson [2006] NSWCA 84 at [60] dealing with a very similar provision in s 88(1) of the Administrative Decisions Tribunal Act 1997 (NSW) (as the Administrative Decisions Review Act 1997 (NSW) was previously entitled). A non-exhaustive list of circumstances that can amount to special circumstances for the purposes of subs (2) is found in s 60(3).
6. In the present case, the Residents Committee has not pointed to any particular circumstance said to fall within any paragraph of s 60(3), nor would the Appeal Panel find that there were such circumstances in this case. Further, both the Residents Committee and Sakkara have had a measure of success on this appeal. The preparation and hearing time involved in dealing with those parts on which the Residents Committee was successful and on those parts on which it was not successful were not so substantially different as to justify a costs order in favour of the Residents Committee in this case.
7. Sakkara's position on costs is set out in par 69 of its submissions as follows: "Subs 60(2) of the Act does not apply and [Sakkara] seeks that costs be dealt with in the ordinary course, in accordance with subs 60(1) of the Act"
8. Section 60(1) provides that each party is to pay the party's own costs.
9. For these reasons and to ensure that there is clarity concerning costs, the Appeal Panel proposes formally to record that there is no order as to costs in respect of this appeal.

Orders

1. For the reasons given above, the Appeal Panel ORDERS that: 1. The appellant is given leave to appeal in respect of the appeal against orders 4, 5 and 6 of the orders made in the Consumer and Commercial Division on 3 September 2015. 2. The appeal in respect of order 2 made in the Consumer and Commercial Division on 3 September 2015 is dismissed. 3. The appeal in respect of orders 4, 5 and 6 made in the Consumer and Commercial Division on 3 September 2015 is allowed. 4. Orders 4, 5 and 6 made in the Consumer and Commercial Division on 3 September 2015 are set aside. 5. There is no order as to costs in respect of this appeal.

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: 23 February 2016