Taylor v Australian Community Villages Pty Ltd: Ashforth v Australian Community Villages Pty Ltd

RC22/55224

1. This a collective application by twenty three Owners under section 71 of the RCA for orders under section 73 that the site fee increase is excessive, should be reduced, set aside or must not exceed a certain amount.
2. Section 74 of the RCA requires the Tribunal to consider: 74 Matters to be considered about excessive increases (1) The Tribunal may have regard to any or all of the following factors when deciding whether to make an order under section 73 - (a) the frequency and amount of past increases in site fees for the community, (b) any actual or projected increase in the outgoings and operating expenses for the community as provided by the operator since the previous increase (if any) in site fees for the community, (c) any repairs or improvements to the community - (i) carried out by the operator since the previous increase (if any), or (ii) planned by the operator for the period covered by the increase being reviewed, (d) the general condition of the community including its common areas, (e) the range and average level of site fees within the community, (f) the value of the land comprising the community, as determined by the Valuer-General, (g) the value of any improvements to the community (including common areas) paid for or carried out by home owners, (h) any explanation for the increase provided by the operator by notice in writing to the affected home owners, (i) variations in the Consumer Price Index (All Groups Index) for Sydney, (j) whether the increase is fair and equitable in the operation of the community, (k) any other matters prescribed by the regulations. (2) The regulations may require the Tribunal to disregard any specified matters (not being a matter referred to in subsection (1)), in any specified circumstances, when deciding whether to make an order under section 73.
3. Notices of Site Fee Increase relied upon by the applicant were admitted as Exhibit A3. Those notices can be grouped and summarised as follows: 1. Undated and unsigned Notice of Site Fee Increase (otherwise than by a fixed method) directed to and in terms of (and see "Explanation for the increase" included in each Notice below),: 1. Stephanine Edworthy, Site BH 1, increase of $10.50 per week from $171.50 to $182.00 per week payable on and from 5 December 2022, 2. John & Helen Ho, Site BH 3, increased by $10.25 per week from $167.50 to $177.75 per week, payable on and from 5 December 2022, 3. Roger Duncan Seymour, Site BH 9, increase of $10.50 per week the Notice stating "Your increased site fees will be $167.50 per week. This increase of $10.25 per week from your current site fees of $177.50 per week". The increase site fee payable on and from 5 December 2022. The Notice contained an error that caused the Notice to be ambiguous and uncertain. 4. William Rout & Sandra Rout, Site BH27, increase by $10.25 per week from $167.50 to $177.75 per week, payable on and from 5 December 2022, 5. Jeannette Czajkowskj, Site BH29, increase by $9.61 per week from $157.50 to $167.11 per week, payable on and from 5 December 2022. 6. Each of the Notices of Site Increase for otherwise than by a fixed method explained the site increase as: Explanation for the increase: We have assessed the following issues as they impact on the community since the previous increase: - The Consumer Price Index (Sydney All Groups) for the June year end - Actual increases in the outgoings and operating expenses for the community including: -Government rates and charges -Sewerage and drainage -Electricity -Water -Communications-telephone, internet, computer and technology expenses, - Insurance premiums and related costs public liability and workers compensation insurance, -landscape and gardening, -accounting and audit fees, legal fees, professional fees, -Site management and supervision, -Waste disposal and removal maintenance, -Wages-superannuation contributions, payroll processing, payroll tax, -Maintenance program to continue upgrades to the community, -OH&S and fire safety protection These costs as well as the commercial reasoning associated with these issues impact directly upon the operation and sustainability of the community. The site fee increase of $10.50 is required to ensure the impacts of these issues are accounted for and help to maintain the continued viability of the community. 1. The Notice of Site Fee Increase for a fixed method dated 6 October 2022 and directed to and in terms of: 1. James Robert Kelly & Joan Elizabeth Kelly, Site BH 7, increase of $10.00 per week, from $167.50 to $177.50 per week, payable on and from 20 October 2022, 1. The Notice provided the increase had been Calculated: - Site Agreement commenced 15/12/20 - In accordance with the Site Agreement: - Site Fees "increase will occur every 1 year" by 3% - First increase stipulated to occur on 01/07/21 - Increases for 01/07/21 (year 1) and 01/07/22 (year 2) not previously applied: (year 1 +year 2 increases (3% per year) = 6%) 1. Ronald David Ashcroft, Sie BH 18, increase of $10.50 per week, from $171.50 to $182.00 per week, payable on and from 20 October 2022, 1. The Notice provided the increase had been Calculated: - Site Agreement commenced 3/12/20 - In accordance with the Site Agreement: - Site Fees "increase will occur every 1 year" by 3% - First increase stipulated to occur on 01/07/21 - Increases for 01/07/21 (year 1) and 01/07/22 (year 2) not previously applied: (year 1 +year 2 increases (3% per year) = 6%) 1. Estimated cost to be about $100,000
4. This is not an application under section 72 on the ground that the increase is substantially excessive when compared with increases for similar residential sites in the community.
5. There are no audited accounts provided by the Operator. The Operator has not particularised the basis for the increase of site fees. Its reasons for the increase of the otherwise than a fixed increased site agreements in the Notices of Increase are general in nature and no specific reason for the increase was before the Tribunal or given to the Owners before or at the hearing.
6. On 22 April 2020 the Tribunal in file RC19/23680 made consent orders between the same parties to carry out repairs and maintenance to the Community property. At the time of this extant application, the works had not been carried out or completed.
7. In Colin Davidson v Seachange Living NSW Pty Ltd [2023] NSWSC 292 AsJ Harrison AsJ said at [79] - [85]: 79. The specific conferral of jurisdiction on the Tribunal for consideration of notice method site fee increases is given by ss 71 and 72 of the RLLC Act. The grant of jurisdiction on this issue and the criteria for the determination of the issue in ss 73 and 74 of the RLLC Act are not simply matters of resolving a dispute about a private contract between the parties. It is not a question of breach of the site agreement. Nor is it a matter of construction of the effect of the site fee increase term and the application of that construction to the facts found. Rather, the Tribunal is exercising a supervisory power over the operation of the site fee increase and is permitted to have regard to any or all of the factors set out in s 74(1) in making a determination. 80. It is incorrect for the Tribunal to approach the matters in s 74 on the basis of the applicant having the burden of proof. 81. The basis of the jurisdiction has six elements: 1. The home owners object to the increase in site fees; 2. The home owners made an application for mediation under s 69; 3. The mediation was unsuccessful; 4. The application is made on behalf of affected home owners by one or more of them appointed as representative by the affected home owners; 5. The application is made within 14 days after the failed mediation; and 6. The application is accompanied by a notice from the mediator. 82. To the extent that is possible to speak of the elements of an application under s 71, the criteria in s 71 are the elements. It is not an element of the claim that fee increase is asserted to be excessive. It is simply the case that the home owners must object to the increase. In the language of "he who alleges must prove", the applicant under s 71 must prove that the home owners object to the increase. 83. When the Tribunal's jurisdiction is invoked, it has power to make any of the orders set out in s 73(1). The making of an order setting aside the increase (for example) does not need to be predicated on a declaration that a site fee increase is "excessive". The limitation on the Tribunal's powers under s 73(1) is given by s 73(4): "the Tribunal cannot make an order that would result in an increase lower than that needed to cover any actual or projected increase (established to the satisfaction of the Tribunal) in the outgoings and operating expenses for the community since the previous increase (if any) in site fees for the community". 84. The language of s 73(4), "established to the satisfaction of the Tribunal," suggests that, to the extent that there is a burden of proof, it lies on the operator and not on the home owner. 85. The proposition by the operator that s 38 of the CAT Act "merely" frees the Tribunal "from any suggestion it might be bound by the rules of evidence" is not supported by the authority cited. In Health Care Complaints Commission v Hill [2022] NSWCA 270 at [32], Basten AJA (Ward P agreeing) said: [32] Provisions governing practice and procedure in the Tribunal are found in Pt 4 of the Civil and Administrative Tribunal Act 2013 (NSW) ("Tribunal Act''). Those principles include the "guiding principle" for the Act and rules, namely "to facilitate the just, quick and cheap resolution of the real issues in the proceedings": s 36(1). Section 38 frees the Tribunal from any suggestion it might be bound by the rules of evidence and allows it to "inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice": s 38(2). It is also required to act "with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms": s 38(4).
8. At [129] - [130] in Colin Davidson Harrison AsJ said: 129. While it is not necessary for me to decide, my tentative view is that the decision in Glennacker is correct. The Tribunal's task in considering whether to make an order under s 73 of the RLLC Act (in this case whether to declare that the increase was excessive) was to consider the factors set out in s 74. From the decision the Tribunal did so, including specifying the factors under s 74(1)(b) (which concerns increases in outgoings and expenses) and under s 74(1)(h) (which concerns any explanation for the increase provided by the operator by notice in writing to affected home owners). 130. From ss 67(4) and 74(h) that the operator must provide an explanation in the notice for the increase and that the Tribunal may have regard to the explanation. In addition the Tribunal may have regard to other factors referred to in s 74, some of which constitute information known only to the operator. The Tribunal was entitled to consider the evidence provided by the operator in order to determine that the increase in site fees was excessive because there was insufficient evidence explaining the increase in outgoings and expenses. It is my view that the Tribunal's consideration of the factors in s 74(1)(a) to (h) involves it in exercising an inquisitorial role to some extent.
9. In its enquiry as to whether the increase in site fees are excessive, Tribunal must consider the matters that section 74 prescribes for consideration of excessive increases and does so:

Frequency and amounts of previous increases

1. There is no evidence before the Tribunal of the frequency and amounts of previous increases adduced by either the Operator or the Owners.

Any actual or projected increase in the outgoings and operating expenses for the community as provided by the operator since the previous increase (if any) in site fees for the community

1. In the notice of site fee increase, the Operator did not provide any detailed reason for the increase in site fees, any increase in outgoings or operating expenses for the community.
2. In its submissions, the Operator's claim of increased outgoings and operating expenses is general in nature and uncorroborated by evidence sufficient to particularise the claim.
3. There are no other documents relied upon by the Operator to justify the increased rent. There is no evidence of whether the additional costs are outgoings and operating expenses or capital costs. The bold claim of CPI increases does not satisfy the Operator's justification of increasing site fees.
4. In Sunrise Property Holdings Pty Ltd v Gregg [2019] NSWCATAP 253 (10 October 2019), the Appeal Panel said where documents are in possession of a party (the Operator) and the party chose not to tender the documents for various reasons then it cannot complain that those documents cannot be relied upon as corroborative evidence. The Operator did not to produce documents such as audited accounts, invoices or receipts for the payment of the increased costs it claims to have incurred.

Any repairs or improvements to the community

1. In the notice of site fee increase, the Operator did not provide as a reason for the increase in site fees because of any increase in outgoings and operating expenses for the community.
2. The Owners contend that there have been little or no improvements to the community. They say that little maintenance has been carried out in the resident's village despite previous orders of the Tribunal, which are noted were by consent.
3. In Meatheringham v Gateway Redhead Operations [2019] NSWCATCD 34 (11 March 2019) the Appeal Panel found that it "is not satisfied that capital expenditure has been proven to be an outgoing or operating expense contemplated by s74". In Burgess v Aspen Living Villages Pty Ltd trading as Barling Beach Beach Holiday Park [2021] NSWCATCD (unreported) found that "Of particular concern, is the lack of distinction between capital works and repairs and maintenance outgoings".

General condition for the community including common areas

1. It is the Owners contention that the general condition of the community has declined. Under the current management of the community with several services and facilities are withdrawn, deteriorated and repairs not attended to including: 1. Gardens not being maintained and shrubs and plants dying from not being watered, weeds are growing without being managed, 2. The roof and ceiling of the community collapsed, and the Owners are unable to use the disabled bathrooms; now repaired since application filed, 3. Common areas, such as the barbeque area is not maintained and dirty, 4. Common driveway pavement and kerbs are cracked and not repaired in multiple areas. 5. Stormwater pipes are sitting on surface of land and broken; Operator says since application filed, the drainage issues are rectificed 6. Security night lighting in common areas has not been maintained and not working. 7. Difficulty in communicating with Operator management staff. 8. Owners exposed to security risks as no effective maintenance of surveillance cameras or alternative security, 9. Street lighting installed is connected to Owners electricity 10. Charges for utilities unsupported by supplier accounts.

The range and average level of site fee within the community

1. There is no evidence before the Tribunal, adduced by either the Operator or the Owners, of the range of site fees among the Owners.

The value of the land comprising the community, as determined by the Valuer General

1. The Owners are unable to establish the value of the land and no evidence is adduced before the Tribunal by the Operator.

The value of any improvements to the community (including common areas) paid for or carried out by home owners

1. There is no evidence before the Tribunal of improvements paid for or carried out by the Owners.

Any explanation for the increase provided by the operator by notice in writing to the affected home owners

1. The explanation for the increase by the Operator is included in the preceding paragraphs.

Variations in the Consumer Price Index (All Groups Index) for Sydney

1. The Operator said at the hearing that the CPI increase for the All Groups Sydney in the 12 months prior to the hearing was 6.1%. No evidence was adduced by either the Operator or the Owners to support this contention nor evidence of variations in the CPI for Sydney

Whether the increase is fair and equitable in the operation of the community

1. The Operator's submits that the site fees have not been increased since it says it acquired the Community in 2018 because of the interruption caused by the Covid pandemic.
2. The Operator says that the Owners evidence of the Notices of Increase in Site Fees for other than fixed fee increases are missing the second pages. Despite the Operator identifying this claimed omission, those pages have not been included in either of the Operator's or the Owner's evidence or submissions.
3. The Owners submit that the increase in site fee is neither fair, equitable or based on established increased outgoings or operation costs.

Any other matters prescribed by the regulations

1. There are no other prescribed matters in the regulations.
2. The Tribunal has considered the evidence and submissions of the parties.
3. The Tribunal is satisfied that the increase in site fees proposed by the Operator to commence on 5 December 2022 is excessive having regard to the inadequacy of the evidence adduced by the Operator in support of the increase in fees.
4. The matters considered by the Tribunal under section 74, as set out in these reasons, do not justify an increase. The bold assertions made by the Operator is not supported by evidence to substantiate or justify the increase as sought, or at all. Of particular concern, there is an absence of information, such as what would normally be expected in defending an increase of site fees, such as cost of works carried out including the distinguishing between capital works and repairs and maintenance outgoings and substantiating increases in costs. The Tribunal has regard to both Meatheringham and Sunrise Properties where the Tribunal and the Appeal Panel have said that it is necessary for the evidence to discern between capital expenditure that could be said to be an "outgoing" or "operating expense". The Operator has failed to do so. Similarly, the Operator chose not tender documents in support of its claimed increase costs and the Tribunal is unpersuaded by a bold declaration of increased costs that is without corroborating evidence.
5. The Tribunal also finds that there is no evidence of compliance by the Operator with section 67 of the RCA which provides that an increase in site fees is not payable unless site fees for sites (increase by otherwise than by a fixed method) are increased in accordance with the section. The notice must include amongst other things an explanation for the increase. The Tribunal has found that there is no proper explanation in the Notice. There is no evidence of when the Notice was given and that the effective date of increase must be not earlier than 60 days after the notice was given. The Notices adduced in evidence do not give evidence of when they were given. The Operator's explanation is that they must have given them in time as the mediation took place at the end of November 2022. It was open to the Operator to adduce evidence of giving the Notice rather than unreliably simply saying they must have been given in time.
6. As to the increase in site fees for the two Owners identified as being fixed increase Owners, those Notices of Increase section 66 provides: 66 Increase of site fees by fixed method (1) This section applies to a site agreement that provides for the increase of the site fees by a fixed method. (2) A site agreement must not provide that the site fees may be increased by more than one fixed method. If more than one method is specified, the method that results in the lower or lowest increase of site fees is the applicable method. (3) The operator must not increase (or attempt to increase) the site fees that are to be increased according to a fixed method otherwise than in accordance with that method and this section. Maximum penalty - 50 penalty units. (4) The operator must give at least 14 days' written notice to the home owner of any increase in site fees, even if the timing of the increase is specified in the site agreement. (5) The notice must - (a) specify the amount of the increased site fees, and (b) specify how the increased site fees have been calculated, and (c) specify the day on and from which the increased site fees are payable, and (d) include such other information as may be prescribed by the regulations, and (e) be in the approved form (if any). (6) The home owner is not required to pay any increase in the site fees until notice of the increase is given as required by this section. (7) The terms of a site agreement fixing the method of future increases of site fees cannot be challenged under this Act. However - (a) the terms of the agreement may be varied if the parties enter into a written agreement to do so, and (b) this subsection does not affect any right that the home owner has, apart from this Act and the Civil and Administrative Tribunal Act 2013, to challenge any of the terms. Note - A home owner may be able to take action over unfair contract terms under the Australian Consumer Law of the Commonwealth. (8) A fixed method of increase may - (a) be for a specified period or for the duration of occupancy of a residential site by a home owner, and (b) have effect for longer than the term of a site agreement for a fixed term.
7. Although included in the collective application for claiming excessive increases of site fees for otherwise than by a fixed method, Mr Ashcroft's and Mr and Mrs Kelly's are individual claims as fixed site fee increase under section 66. Neither Mr Ashcroft or Mr and Mrs Kelly have sought an order for refund under of excessive site fees under section 68 and accordingly the Tribunal makes no order. If the Tribunal is wrong, then in considering whether the Notices were compliant with section 66, the Tribunal finds that the notices were given 14 days before the date of increase. Interpreting the Site Agreement provisions for each of these Sites, they provide for the increase to occur every year by 3% and stipulate the increase to occur on 1 July 2021. The Operator did not claim the increase of 1 July 2021, however, it was entitled to the increase at that time, and the further increase of 3% on 1 July 2022. The Tribunal finds, if wrong in its first determination, that there was no application, regarding both these sites that the site fee has been properly increased.
8. Accordingly, in RC22/55224, the Tribunal declares: 1. that the increase of site fees to take effect on 5 December 2022 is excessive, and, 2. that the increase of site fees is set aside. 3. Operator is to either refund to the Owners or give a credit for site fees overpaid since 1 July 2021.
9. In the remainder of application RC22/54519, the Tribunal considers the orders sought under section 85(3) of the RCA.
10. The Operator submits that it paid invoices from AGL dated 1 September 2022 in the amount of $4,937.22 and 12 September 2022 in the amount of $17,744.14 but withheld from the payment from the 12 September 2022 invoice of $4,000 as it contested the energy supplier's charges. Eventually AGL granted a credit for the $4,000 which was then partly distributed, the amount of the credit evenly based on usage to each Owner. The Operator contends that it calculates the charge for utilities to the Owners according to the methodology approved in Reckless v Silva Portfolios Pty Ltd t/as Ballina Waterfront Village & Tourist Park [2018] NSWCATAP 80
11. The Operator submits that the Operator originally invoiced to the Owners for the period covered by the adjusted AGL invoice of 12 September 2022 for $14,843.03 tariff was $0.66 per kwh. After the credit is applied, the adjusted amount the Operator invoice reduced to $10,443.03, resulting in the tariff being $0.46 per kwh. The Operator says that the individual Owner energy usage was recalculated based on the new tariff being applied to the Owner's energy usage in kwh and the difference between the original amounts and the adjusted charges became the credit that was applied to each resident.
12. The Operator further submits there are 34 Owner's that are supplied with energy using this account and method. Mr Ashcroft's new charge was approximately 1% of the total adjusted Operator invoice, new charge to Mr Ashcroft is $81.88 which as a percentage of $10,443.03 is 0.78%. The charges of Origin energy did not take effect until after the AGL invoices, that is for the period after 31 August 2022. The Operator did not charge more for electricity that it was charged.
13. Mr Ashcroft submits the Reckless at [58]: …The position is simply this - the Park Operator cannot charge Mrs Reckless for her consumption of electricity more than it is being charged by Origin Energy for the amount Mrs Reckless has consumed.
14. Mr Ashcroft says that charges were made by the Operator for AGL and then again for the Origin supply. However, the invoices adduced in evidence are for different periods and the Operator's evidence is that the electricity supplier changed for AGL to Origin. The AGL invoice issued on 1 September 2022 was for electricity supplied for the period 1 August 2022 to 31 August 2022. The AGL invoice issued on 12 September 2022 was an adjustment invoice for the period 1 August 2022 to 31 August 2022. The Origin invoice issued on 10 October 2022 was for electricity supplied for the period 26 September 2002 to 30 September 2022.
15. The Tribunal is not satisfied that the Owner has proven that the Operator is charging Owners for electricity consumed more that it is being charged by its electricity suppliers.
16. The application by Mr Ashcroft for orders under section 85(3) is dismissed.

Conclusion

1. To conclude the consideration of the application, the Tribunal orders: 1. Application RC 22/54519 is dismissed 2. In application RC22/55224 the Tribunal declares that for the home owners of homes located in the Australian Community Villages Bass Hill: 1. the site agreements that provide for the increase of site fees by notice (otherwise than by a fixed method): 1. that the increase of site fees to take effect on 5 December 2022 is excessive, and, 2. that the increase of site fees is set aside. 3. Operator either refund to the Owners or give a credit for site fees overpaid since 5 December 2022. 1. That regarding the site agreements that permit site fee increases by a fixed method the application is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 September 2023