THE RELEVANT LAW
93For the purposes of this determination it is useful to point out a crucial difference between tenancy agreements and site agreements. Under a residential tenancy agreement related to a park, a resident normally rents the dwelling from the park whereas in a site agreement the residents own the dwelling on a site. Under a tenancy agreement, a tenant may be terminated without cause after the end of any fixed term when given a 90-day without cause termination notice under s 85 of the Residential Tenancies Act 2010. The only comfort for a tenant as to possible termination under a periodic agreement is a maximum of 90 days.
94The RPA has no equivalent clause. Other than termination based on change of use as in this case, absent other grounds for termination common to both forms of agreement such as failure to pay rent / site fees or behavioural breaches, a resident under a site agreement continues to hold over periodically after the end of the fixed term and cannot be terminated without cause. This has led many park residents to believe that if they comply with the normal provisions such as paying site fees and not behaving reprehensibly, they can hold over indefinitely unless there is a change of use. It is that perception that goes to the heart of this proceeding and was summed up by the words of the resident who said the site was "never to be sold and to stay in the family".
95What ought to be made clear is that a site agreement confers no real property rights and no proper basis for a resident to consider that they might stay on a site in perpetuity or that they have any indefeasibility of title.
96The nature of a resident's right to the site is limited to a right to occupy land owned by the park granted by a contractual site agreement. That point of law was made plain in Haraba P/L v Castles [2007] QCA 206. In that case in which I was Junior Counsel led by Tony Morris QC, the Queensland Court of Appeal considered whether a site resident under Queensland's equivalent legislation, the Manufactured Homes (Residential Parks) Act 2003, was an "owner" under the site agreement and what rights residents had under the agreement until terminated. Section s 38(1)(f) allows for termination if "the park owner wishes to use the residential park land, or a part of the park in which the site is located, for another purpose stated in the application (the stated purpose)." There is little difference in terminating for a change of use or use of the land for another purpose. Commenting on rights conferred to a park resident under a site agreement at [20], Williams J said of the finding of the judgement below that was being appealed:
[20] At the very outset of his reasons for judgment the learned District Court judge made a serious error. He said that the respondent "purchased the right to occupy that site on 28 April 1995 for $42,000." As noted above, a home owner does not purchase a site. A site agreement merely confers a right to place a manufactured home on the site upon payment of the rental and otherwise complying with the terms of the site agreement. By a separate agreement the respondent purchased her manufactured home for $42,000 in April 1995, and on termination of the site agreement she remains the owner of that home. That error permeated the judge's reasons because subsequently he referred to the fact that termination of the site agreement as sought by the applicant would have the consequence of "excluding the respondent from recovering her investment after ten years." That was again repeated when he said that compensation pursuant to the Act would not "compensate her for the lost equity of some $13,000 accrued over the past 11 years". It needs to be repeated that pursuant to a site agreement under the Act a site is not "purchased". Nor, of course, is it appropriate to speak of an "equity" of a home owner in a site.
97Compensation on change of purpose provisions were added to the RPA under the Residential Parks (Statutory Review) Bill 2005 ("the amending legislation"). The second reading speech for that bill states that parks are "unique housing arrangements in that [residents] live in their own homes on rented parcels of land".
98I make these points about the RPA and the limitations on the rights of the residents being fully aware that the new Act runs contrary to the old in the sense that it refers to "home owners" sharing in capital gain. To give but one further example from the new Act in addition to the loss of residency submission already made by Ms McMahon about s 141 of the new Act, s 110 of the new Act provides:
Voluntary sharing arrangement
110 Voluntary sharing arrangement
(1) A site agreement entered into after the commencement of this section may provide for a voluntary sharing arrangement.
(2) A "voluntary sharing arrangement" is any provision under which the home owner agrees to one or more of the following:
(a) to pay a specified entry fee to the operator, on entry into the agreement or in any other manner specified in the agreement,
(b) to pay deferred site fees to the operator, being site fees the payment of which is deferred in a manner specified in the agreement,
(c) to pay a specified sale amount to the operator if the home is sold by the home owner, with that sale amount being either (but not both) of the following:
(i) a specified share of the capital gain in respect of the home,
(ii) a specified on-site premium of the total sale price of the home as determined in the agreement,
(d) to pay a specified exit fee to the operator, being a fixed fee (not of a kind referred to in paragraph (c)) that is payable if the home is sold or removed from the site.
(3) If a home is sold and the operator is the selling agent, the operator may deduct any amount payable under the voluntary sharing arrangement from the proceeds of the sale that are held by the operator in accordance with the agreement.
(4) If a home is sold and the operator is not the selling agent, the selling home owner must pay any amount owing to the operator under the voluntary sharing arrangement within 14 days of the sale being finalised.
(5) The Tribunal may, at any time, on application by an operator, make an order requiring a home owner to pay any amount owing to the operator under a voluntary sharing arrangement together with interest determined by the Tribunal.
(6) A sale amount is not payable if a home is sold to be removed from the residential site or is purchased by the operator or a close associate of the operator.
(7) In this section: "capital gain" means any increase between the amount that the home owner paid for the home and the amount that the purchaser paid for the home. Site fees and any fees or charges payable under the site agreement are not to be included in the calculation of the capital gain.
99As Mr Price pointed out in his report, a chattel such as a manufactured home only deteriorates and depreciates over time. It cannot acquire capital gain. The legislators of the new Act mingle the situation in parks with home owners under real property titles to land. The legislators must have it in mind that the capital gain applies to a combination of the chattel and the contractual right to occupy the land under a site agreement.
100But I accept the submissions of Dr Berveling. While the new Act significantly departs from the old and provides much more specific consideration for interpretation of section 128 in the RPA and makes even more complex the nature of the rights a resident has over a site, I am not convinced that I can have regard to the new Act as an interpretive aid when interpreting compensation to be made under s 128 of the RPA. The cases cited by Dr Berveling support that. The new Act does not make an provisions for, or create any instruments which allow me to interpret the RPA under the new provisions. To hold over the entire proceeding until the new Act becomes operative also would also make a mockery of the requirements for civil proceedings, and Tribunal proceedings in particular, to be "determined in an informal, expeditious and inexpensive manner".
101Making findings under the new Act about capital gain relating to a chattel that only declines in value or in relation to compensation based on loss of residency will be issues for a Tribunal member to determine sometime in the future. I trust that difficult task falls to a member far wiser than me. The RPA is absent any such references and I must interpret what is the law in that legislation.
102The amending legislation specifically had in mind a scenario as applies in this case. Further, I do not accept that the notion that a right to occupy on relocation is totally foreign to compensation that can be ordered under the RPA. Underneath its lack of precision, 128 is based on an assumption that relocation must occur either to a new residential site under s 128(3) or some other location under s 128(4). The resident has to relocate to somewhere under 128(4). A resident does not disappear into the ether. The second reading speech for the amending legislation states:
The third and final group of reforms contained in this bill relate to the termination mechanisms where the park owner wishes to redevelop his or her establishment and to the compensation payable to residents as a consequence. This is the area that has changed so much since the legislation came into effect in March 1999. As I commented earlier, the redevelopment environment has altered somewhat in the intervening years and some park owners are weighing up whether to remain in the business of providing permanent residents with home sites. It is clear that pressures have built up and the process for dealing with park owners seeking to regain vacant possession of their land for redevelopment purposes, and the subsequent payment of compensation to affected residents, needs to be improved.
I make no apologies for the fact that the refinements in the provisions relating to termination of tenancy and access to compensation will strengthen the position for park residents. This is only right and just, as they have the most to lose in a park redevelopment scenario. Not only do they face losing their home but also their community, and their longstanding neighbours and friends. They also have the challenge of making new housing arrangements, either by moving their dwelling to another park-if they can find a suitable and available site-or by trying to sell their home independently and then finding suitable alternative accommodation. The cost of moving moveable dwellings is substantial and the relocation logistics can be a tricky exercise. It can be an extremely traumatic and difficult time for people who may well have expected to see out their remaining days in the park. It is essential that if the park owner has legitimate reasons to seek closure of his or her park for redevelopment purposes residents are granted the most dignified and helpful process that is possible in such circumstances.
... The other major reforms to the termination provisions of the legislation in the redevelopment context relate to the payment of compensation to residents. Access to compensation is a justified right of residents who have not only lost their place of abode but have also had their lives uprooted.
103Legislators drafted the amending legislation at a time when they were aware there were not ample other parks to move to. Relocation possibilities have been reduced by many park owners on the coastal areas of NSW changing long term sites into holiday occupation sites due to a belief they can make more money on such sites and have less onerous long term obligations to tourist occupants than they have to occupants under a residential site agreement.
104Section 128(4) clearly allows for a compensation amount to be set where, as in this case, the resident cannot be relocated to a new residential park site. Considerations to be factored into any compensation amount include the costs of removing the dwelling from the old site, the costs of transporting it to a new location, the costs of disposal, the cost of transporting residents' possessions to a new location, the costs of repairs of the dwelling for damage incurred arising from its removal and any other assistance provided by the park owner.
105Expressly, s 128 does not limit the compensation to be paid to less than or equal to the value of the dwelling. Compensation is only so limited at s 128(4)(d) if compensation is to be for reasonable costs of repairing any damage to the dwelling arising from its relocation. In other words, if compensation were made under s 128(4), it is quite possible that it may be more than the value of the dwelling if the other factors to be taken into account being removal, transporting, installing, landscaping or disposing of the dwelling, are added to repairs as provided for in 128(4). Consequently, the compensation order can be in excess of the base value the dwelling. If the legislators had intended that s 128 should limit any compensation to the value of a dwelling and no more, they would not have drafted the RPA to create such a limitation only in respect of the 128(4)(d) damage factor. They would have drafted the limitation to all of s 128(4) at least, or to s 128 as a whole.
106Instead, in the second reading speech to the amending legislation, the statutory purpose was stated as:
Sometimes residents are faced with a difficult choice-that is, they have decided not to move their home to another park due to personal reasons or because they cannot find a suitable site, but they find that they cannot sell their home on site to anyone else because their park is facing closure. Also, there is a limited market in selling a park home to a buyer who is willing to remove it for use elsewhere. Often the resident's only option is to negotiate with the park owner to take the dwelling off their hands. This situation creates its own set of problems. The park owner is obviously in a powerful position and some residents have reported to the Office of Fair Trading that they have been forced into accepting a pittance for a home that is worth much more.
107Underpinning s 128(4) is that on termination and giving of vacant possession residents must go somewhere and must have a right to occupy somewhere else. That right to occupy somewhere else and any compensation allowed for it is inherent in the s 128(4) factors that allow a compensation order in excess of the mere value of the dwelling.
108The addition of the word "disposal" to the statutory language at s 128(4)(b) within a context were all other costs are treated as relocation considerations cannot mean that in a case where relocation is not possible the only compensation the resident should get is the disposal amount which most probably be far less than those amounts Mr Price valued for the residences. It is not the object of the Act for the residents rights to be treated so shabbily.
109As Ms McMahon submitted, if compensation was limited to dwelling value that would allow a park owner to give a notice of termination under a change of use and run down the park facilities so that the value of the dwelling deteriorates over the time compensation is to be assessed.
110I also do not accept the applicant's submission that the park owner has agreed to buy the dwelling from the resident at a price no less than its value a provided under s 113(3A)(b). There is no determination by the Tribunal under section 130A as required by s 113(3A)(b). I accept Ms Mahon's submission that s 130A of the RPA is voluntary and does not apply. The second reading speech of the amending legislation makes plain that the section cannot be binding:
The bill makes it clear that the value of the resident's home is to be calculated on its stand-alone value and will not include any component of the land which it stands upon. You could not have a more even-handed provision than this one. It provides for an independent referee when the parties cannot agree on a fair price. It ensures that residents are not taken advantage of. It makes it clear that park owners do not have to pay any proportion of the value of land that they already own. The tribunal's decision will not be binding on either party, but this mechanism will bring much greater transparency and parity to the process of selling a home [my emphasis]. It will also bring these issues to the attention of the tribunal when a park owner seeks to regain possession at the end of the process. The reforms to the provisions dealing with these two prime areas of concern-termination of tenancies for redevelopment and the payment of compensation-are crucial aspects of the bill.
111The object of s 130A is for the Tribunal to enable the parties to come to an agreement as to value. If anything is certain in this matter, it is that the parties have been unable to come to an agreement as to the value the residents' dwellings. Section 130A does empower the Tribunal to seek an evaluation of the sites. Either party may apply to the Tribunal for a statement of the value. But such a statement by way of an order is advisory only and "does not bind the resident or the park owner or affect any agreement between them for the sale of the dwelling". Residents did not seek an agreement under s 130A. I did not seek the evaluations that were provided by way of expert evidence. I accept Ms McMahon's said the residents ought not be bound by any order as to evaluation under s 130A for an agreement they did not seek.
112But I do not find that the law is that residents must be compensated to the full value of having a dwelling on a comparable park. The s 128(4) relocation factors fall short of saying that compensation is to include the full value of purchasing a comparable home at a comparable park. As indicated in the second reading speech to the amending legislation, the value of the resident's home does not include any component of the land which is the site. It falls short of that and stipulates the considerations in s 128(4) allowing an order to be made in excess of the value of the dwelling due to the need to relocate.
113There is also nothing in the RPA that suggests a compensation order should be based on what Tricare might have allowed as a compensation fund when negotiating the purchase of the park with the vendor. I give no weight to that evidence and make no finding as to how much Tricare was allowed in its obligations for a compensation fund.
114My critical problem in making an order under s 128(4) is that both parties would freely concede they have not given the Tribunal any evidence of the quantum to be allowed for the factors I must take into account.
115This does not mean there was no evidence of what compensation order might be made beyond the value of the dwelling as opined by Mr Price. It was conceded by Mr O'Shea that some residents who settled, particularly those who did take their dwelling from the park, were offered compensation sums in excess of the appraisal of Mr Price. Reasons for that were not clearly stated, but it is more probable than not that considerations of the other s 128(4) factors that allow an order in excess of the value of the dwelling underpinned the settlement offers. It useful to examine those offers made in excess of the value of the dwelling to those residents who settled. Without identifying the particular site, I note the following payments in excess of appraisal:
Appraised value Amount Paid
$1,500-$2,000 $15,000
$12,000-$15,000 $35,000
$5,000-$6,500 $18,000