Carolyn Forsyth & Ors v Haraba Pty Ltd t/as Brisbane Gateway Resort [2013] QCAT 408

CITATION: Carolyn Forsyth & Ors v Haraba Pty Ltd t/as Brisbane Gateway Resort [2013] QCAT408 PARTIES: Carolyn Forsyth & Ors (Applicant) v Haraba Pty Ltd t/as Brisbane Gateway Resort (Respondent) APPLICATION NUMBER: OCL063-12 MATTER TYPE: Other civil dispute matters HEARING DATE: On the papers HEARD AT: BRISBANE DECISION OF: Peter Walker, Member DELIVERED ON: 31 July 2013 DELIVERED AT: Brisbane ORDERS MADE: 1. The application seeking the following orders be dismissed: (a) That any notice/s of the site rent increase based on a “Market Review” issued by the Respondent to the Applicants be declared null, void and of no effect. (b) A Declaration that the Applicants Site Agreements do not provide an mechanism by which the Respondent is entitled to increase site rent under section 69 of the Act on the basis of a “Market Review”. (c) That the Respondent refund to the Applicants in full all site increase rent paid by the Applicants which is attributable to “Market Review” increases imposed by the Respondent since the Act has come into force. (d) Any other order the Tribunal considers appropriate. -- 1 of 13 -- 2 CATCHWORDS: Where Notice of Rent increase had been issued pursuant to the provisions of section 69 of Manufactured Homes (Residential Parks) Act 2003 (QLD). Where validity of Site Agreement so far as it made provision for a Market Review challenged. Meaning of section 69(1)(b) – Market Review - Statutory Interpretation – where Objects of Act had changed – whether ambiguity existed. Manufactured Homes (Residential Parks) Act 2003 (QLD), ss 4, 68, 69, 70, 71 and 166. Palm Point Pty Ltd v The Residents of Bribie Pines Island Village and ORS [2007] QDC 130; The Residents of Ridge Water Village v SJ Tickle and Son Pty Ltd and Budfield Pty Ltd [2004] CCT N005-04; The Residents of Gateway Village Resort v Haraba Pty Ltd ATF the Haraba Trust t/as Gateway Village Resort [2005] CCT MH006-04, JARVIS Nigel Grant –v- Lewani Palms Resort Pty Ltd [2006] CCT M014-05, DARNELL, Keith and Joan v S.E.Q Properties Pty Ltd [2005] CCT M018-04; Lucado-Wells v Emmetlow Pty Ltd [2005] CCT M024-04 in Alby Paowerlett v SEQ Properties Pty Ltd; Haywood v Surtie Enterprises Pty Ltd trading as Greenbank Gardens [2009] CCT MH027-09 APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION Background: [1] The Respondent, Haraba Pty Ltd, is the owner of the Brisbane Gateway Park Resort. [2] Since the commencement of the Manufactured Homes (Residential Parks) Act 2003 (the Act) there have been three market rent reviews performed in respect of the Park. The first of these was in 2004 which was the subject -- 2 of 13 -- 3 of a Decision of Member Gallagher in the Commercial and Consumer Tribunal1. [3] The Decision in 2008 was also the subject of the Commercial and Consumer Tribunal though that Decision related purely to issues of valuation. [4] The present Application primarily relates to a Notice dated 4 June 2012, whereby all the home owners in the Park received notice of an increase in the site rent which was to be calculated by way of a market review purportedly in accordance with the terms of their Site Agreements. The increase was notified pursuant to Sections 69 of the Act to the Owners by virtue of Agreements that are in existence in the Park. For the purposes of this Application the only ones that are relevant are the Type One and Type Two Site Agreements (―T1/T2‖). No holders of Type Three (T3) or Type Four (T4) Site Agreements are parties to this Application. The Applicants have confirmed that the submissions relate only to the TI/T2 increases2. [5] Relevantly, the T1/T2 Site Agreements provide, in part: “Provided that in no event shall the fee be decreased from the previous year and further provided that the said license fee will be reviewed to market on July 1st every leap year.” [6] The T3 and T4 Site Agreements are worthy of note for the terms of their review provisions. In case of T3, this is as follows: “…… represents any increase by the Park owner’s review to market on 1st day of July each leap year (i.e. which is divisible by four) having regard to all factors which may influence the market value of rentals in the Park”. [7] In respect of the T4 Site Agreements, they contain the following provision: “8. Four yearly review to market of the rent site (a) The Park owner may determine the site rent based on a review to market every four years, to take effect on the 1st day of July each leap year (called the “Four Yearly Review to Market”). (b) When undertaking the Four Yearly Review to Market: (1) The Park owner may have regard to any factors which it considers may influence the market value of the site rents in the Park. 1 The Residents of Gateway Village Resort v Haraba Pty Ltd ATF the Haraba Trust t/as Gateway Village Resort [2005] CCT MH006-04. 2 See both Submissions at paragraph 6 and Submissions in Reply at paragraph 6. -- 3 of 13 -- 4 The Applications in this Matter: [8] On 29 June 2012, the Applicants commenced this primary proceeding seeking orders that the increase be set aside. The terms of the Application have been subsequently extended and on 29 April 2013, the Applicants filed an Application for Miscellaneous Matters alleging that the Notice dated 4 June 2012 is invalid as it does not state how the increase was calculated as required by Section 69 (2)(b) of the Act (―the Defective Notice Application‖). That part of the Application has been determined by the Tribunal in favour of Haraba Pty Ltd. [9] On 14 May 2013, the Applicants filed an Application for Miscellaneous Matters which alleged effectively that the T1/T2 Site Agreements do not contain a market rent review clause that complies with Section 69 of the Act (―Non-compliant Clause Application‖). That Application specifically sought the following orders: (a) That any notice/s of the site rent increase based on a ―Market Review‖ issued by the Respondent to the Applicants be declared null, void and of no effect. (b) A Declaration that the Applicants Site Agreements do not provide an mechanism by which the Respondent is entitled to increase site rent under section 69 of the Act on the basis of a ―Market Review‖. (c) That the Respondent refund to the Applicants in full all site increase rent paid by the Applicants which is attributable to ―Market Review‖ increases imposed by the Respondent since the Act has come into force. (d) Any other order the Tribunal considers appropriate. The Applicant’s Principle Application: [10] The principle application in the proceeding challenges a market rent review undertaken by the Respondent and the subject of the June 2012 Notice on the basis that it is excessive and, having regard to the matters contained in Section 70 of the Act should be set aside. Legislative Background: [11] Part 11 of the Act deals with variations to Site Rent in the context of this Application. [12] I am specifically asked to consider three main sections of part 11 of the Act, mainly Section 68, Section 69 and Section 71. -- 4 of 13 -- 5 [13] Section 68 relevantly provides that ―Site Rent payable under a Site Agreement may only be varied in the ways stated in this part‖. [14] Section 69 relevantly provides: 69 Notice of increase in site rent (1) This section applies if a site agreement— (a) provides for an increase in the site rent payable under the agreement; and (b) states how the amount of the increase is to be calculated. (2) If the park owner wishes to increase the site rent under this section, the park owner must give the home owner a notice stating the following— (a) the amount of the increased site rent; (b) how the increased site rent has been calculated; (c) the day the increased site rent is first payable (the increase day). (3) The park owner must also state in the notice that if the home owner considers the increase is excessive, the home owner may apply to the tribunal, within 28 days after receiving the notice, for an order reducing the amount of, or setting aside, the increase. Maximum penalty—100 penalty units. (4) The increase day must not be earlier than 28 days after the notice is given. (5) The increased site rent is payable from the increase day. [15] Section 71 of the Act relevantly provides Notice of proposed increase in site rent (1) This section applies if— (a) the park owner for a residential park wishes to increase the site rent payable under a site agreement; and (b) section 69 does not apply to the proposed increase; and (c) the proposed increase in site rent is necessary for the park owner to cover— (i) significant increased operational costs in relation to the park, including significant increases in rates, taxes or utility costs for the park; or (ii) unforeseen significant repair costs in relation to the park; or (iii) significant facility upgrades in relation to the park. (2) However, the proposed increase in site rent can not be based on a market review of site rent. (3) The park owner must give the home owner for the site a notice stating the following— -- 5 of 13 -- 6 (a) the amount of the proposed increased site rent; (b) the basis for the proposed increase; (c) the day the proposed increased site rent is first payable (the increase day); (d) the home owner must, within 28 days after receiving the notice, give the park owner a written response indicating whether or not the home owner agrees to the proposed increase. (4) The increase day must not be earlier than 2 months after the notice is given. (5) The home owner must within 28 days after receiving the notice give the park owner a written response indicating whether or not the home owner agrees to the proposed increase. (6) If the response indicates the home owner agrees to the proposed increase, the proposed increased site rent is first payable on the increase day. (7) If the home owner does not give a written response under subsection (5) within the 28 days, the home owner is taken to have not agreed to the proposed increase. (8) If the park owner and home owner do not agree on the proposed increase within the 28 days, the park owner may apply to the tribunal for an order about the proposed increase. (9) In deciding the application, the tribunal may have regard to the matters mentioned in section 70(3)(d) to (l). (10) Also, in deciding the application, the tribunal may make any of the following orders— (a) an order reducing the amount of the proposed increase by a stated amount; (b) an order setting aside the proposed increase; (c) an order confirming the proposed increase on the conditions, if any, the tribunal considers appropriate; (d) another order the tribunal considers appropriate. (11) If the tribunal makes an order mentioned in subsection (10)(a) or (c), the order must also state the day from which the increased rent is first payable. [16] Section 71 provides Park owners with a way to increase site rent where section 69 does not apply. The amending Act provided a clear amendment by inserting Section 71(2) which stopped increases in site rent that were based upon a market review. It is notable that Section 71(2) has retrospective effect. [17] Having regard to Section 71(2) as the Notice with which we are concerned purports to be a Market Review, the only way in which it can be compliant is if it complies with the provisions of Section 69. [18] The previous Decision in respect of this matter primarily related to an interpretation of Section 69(2)(b) while in contrast, the primary focus of this Application is upon Section 69(1)(a) and Section 69(1)(b). -- 6 of 13 -- 7 [19] Accordingly, the primary consideration in respect of this Application is whether the site agreement in question complies with both limbs of Section 69(1). If it does, the outcome will be that the Site Agreements in question are capable of market review pursuant to the provisions of Section 69 of the Act. The Submissions: [20] These are contained in full in a document filed 28 June 2013 and further in submissions in reply to the Respondent‘s submissions filed 19 June 2013. In short, the thrust of those submissions is as follows: The Site agreement is insufficient to comply with the provisions of Section 69(1)(b) because it does not state how the amount of the increase is to be calculated. The Applicant submits that Section 69(1)(b) requires a Site Agreement to contain more than a generic reference to a ―review to market‖ as that is not a sufficient statement of how the increase is to be calculated. The terms of the Site Agreement have not changed since the introduction of the Act and the Applicants submit the consequence is that Haraba has never been lawfully entitled to impose market review site increases on the Applicants pursuant to Section 69. Accordingly, it submits that all increases in 2004, 2008 and 2012 are invalid. [21] By way of response the Respondents submit that the meaning of Section 69(1)(b) is clear and unambiguous. In short it submits that it is sufficient to comply with the provision if the agreement uses the terminology ―Review to Market‖ or any other similar term as that is, for the purposes of the legislation, ―how the amount of the increase is to be calculated‖. [22] They submitted that there can only be any other interpretation of Section 69(1)(b) in the event that the Applicant can point it to an ambiguity within the terms of the section itself. [23] In many respects, this is essentially the same question as arises in respect of Section 69(2)(b) and which is already been the subject of a Decision in the proceeding. Approach to Interpretation: [24] It is worth referring to the District Court of Queensland decision in Palm Point Pty Ltd v The Residents of Bribie Pines Island Village and ORS [2007] QDC 130. Specifically in that case Dearden DCJ found as follows: “I do not consider that there is any ambiguity in the structure or wording of the legislation. Clearly MHRPA Section 69 provides for the default position under which a Park owner can seek to increase site rent pursuant to the provisions of a Site Agreement which has site rent increase provisions in the Agreement…..” -- 7 of 13 -- 8 [25] I agree with that decision to the extent that it finds that there is no ambiguity within the meaning of the section itself. I also refer to the Defective Notice decision where the same view was expressed by me with regard to Section 69(2)(b)3. I consider that reasoning to be equally applicable to Section 69(1)(b). [26] I am asked by the Applicants, as part of their submissions to the contrary, to consider the Objects to the Act and in particular the way in which the Objects were amended by the Amendment Act of 2010 in conjunction with the provisions of Part 11. [27] I have already expressed the view that the change in the Objects is, not significant in terms of the interpretation of Section 69 and I do not intend to change that.4 [28] To that I would simply add that the Applicants have expressly pointed out that the amendments to Section 4 of the Act are intended to provide ―increased clarity‖ about the purpose of the Act, rather than changing its main purpose in any major way.5 I accept that there is a slight change in focus in that the new Objects add the issue of protection of home owners from unfair business practices and to enable home owners to be fully aware of their rights and responsibilities in their relationship with park owners. However, those changes must be considered in the context that the Legislature did not see fit to make any changes to Section 69(1)(b) itself, nor indeed to any part of Section 69. [29] In the previous decision on this proceeding I made comments about an approach to Statutory Interpretation, and concluded that generally I could only look outside the plain meaning of a Section in the event that an ambiguity was found within the Section itself. I do not see, for the reasons previously expressed, that this provision contains any ambiguities, any more than Section 69(2)(b) does. Section 166 – Argument [30] It is further submitted on behalf of the Applicant that the wording of Section 166 of the Act supports their interpretation of Section 69(1)(b) relevantly, that Section states as follows: “If it is impractical to obtain data for the range of site rents mentioned in paragraph (a) or data is not available for that range – the range of site rents usually charge for comparable sites in comparable residential 3 See Forsyth & Ors v Haraba Pty Ltd t/as Brisbane Gateway Resort [2013] QCAT 375 at [29] - [31]. 4 Ibid [19] - [21]. 5 See explanatory memorandum to the amendments to the Act and the submissions of both parties. -- 8 of 13 -- 9 parks in comparable localities to the locality of the park or in; the locality the park is in; or (c) if it is impractical to obtain data for the range of site rents mentioned in paragraph (a) or paragraph (b) or data is not available for that range – general trends in rent or residential accommodation in the locality the park is in”. [31] In my view, there is no basis upon which I can use Section 166 as an aid to interpretation of Section 69(1)(b) of the Act. From Section 166 it may be inferred that it would be desirable to obtain more detail than is provided in the current Site Agreement and to that extent, it does seem to me that more information would indeed be desirable. Nevertheless, to suggest that it aids as an interpretation in Section 69(1)(b) is in my view, incorrect. Had such detail been intended in respect of Section 69, it would have been a simple matter for it to have been included at the relevant time in a similar way to what has been done in respect of this Section. I therefore find that Section 166 of the Act is of no assistance in the interpretation of Section 69(1)(b). [32] Accordingly, Section 69(1)(b) must also be interpreted in accordance with its clear meaning. [33] Previous decisions provide some assistance in determining the correct approach in this respect. Other Decisions: [34] In The Residents of Edgewater Village v SJ Tickle and Son Pty Ltd and Budfield Pty Ltd [2004] CCT N005-04 the former Commercial and Consumer Tribunal considered an increase in site rent under Section 69 of the Act where the agreement contained the following provision: “On the review date in any year which is divisible by three without remainder the owner may in his sole discretion increase the licence fee in his sole discretion to a fee which the owner determines to be a fair market fee but which shall not be less than the fee which would otherwise have been determined if the fee had been increased for such year in the manner set out in (b) above.”6 [35] In respect of the term permitting an increase in the site rent to a ―fair market fee‖ the members found as follows: “Although the Site Agreement does not prescribe a precise numerical formula to be applied, it does, in our view, describe how the increase is 6 At paragraph 22. -- 9 of 13 -- 10 to be calculated. We find that Section 69 of the Act therefore applies to this matter rather than Section 71……..” [36] This exact provision was of course considered in The Residents of Gateway Village Resort v Haraba Pty Ltd as Trustee for the Haraba Trust trading as “Gateway Village Resort‖ [2005] CCT N006-04 where the terms of the Licence Agreement were precisely those in question in this proceeding. In that Decision, the Tribunal stated as follows: “The second part of this clause sets out the process which Haraba must follow in reviewing site rent. The formula set out must be applied on 1 July each year to decide rent that was payable during the preceding financial year to arrive at the new site rent. The last proviso in the clause is that on July 1st every leap year, the site rent “will be reviewed to market. I am satisfied that this clause provides for both an increase in the site rent payable under the Site Agreement and instructions as to how the amount of the increase is to be calculated. I therefore find that Section 69 of the Act is the relevant Section that applies to the increase in site rent”.7 [37] Similar findings were made in the Decision Lucado-Wells v Emmetlow Pty Ltd8 in Alby Powerlett v SEQ Properties Pty Ltd9 and in Haywood v Surtie Enterprises Pty Ltd trading as Greenbank Gardens10. [38] It would appear plain then that on a number of occasions, the Tribunal or its predecessor has decided that a term permitting site rent to be ―reviewed to market‖ both provides for an increase in the site rent as well as provides instructions as to how the increase is to be calculated. There are not any decisions of which I am aware that come to a different view. [39] I take note of the Applicant‘s submission, that in none of these cases was the statutory interpretation point fully argued and I accept that submission. Nevertheless the point was considered and it seems to me, considered correctly. Discussion: [40] It is interesting to note that in their submissions in reply, the Applicants plainly state: “…. It is suffice to make plain that the Applicant’s submission on the proper interpretation of Section 69(1)(b) is that a site agreement is compliant’ in the case of a market review; only if it provides information 7 At paragraph 23. 8 [2005] CCT M024-04. 9 [2006] CCT MH031-05. 10 [2009] CCT MH027-09. -- 10 of 13 -- 11 that allows the home owner to have an understanding of how the market review is to be calculated11.” [41] Despite this, they say that the T3 increase term is compliant effectively because of the addition of the words ―… having regard to all factors which may influence the market value of rentals in the Park‖.12 [42] With due respect, I cannot agree that the words ―having regard to all factors which may influence the market value of rentals in the Park‖ add anything to an understanding of how the market review is to be calculated. Those words are extremely general in nature and do nothing, in my view, to add to the understanding of what market review is, or how it is conducted. In particular I do not see how they can, in any shape or means, provide greater protection, or understanding to the Home Owners than the simple use of the words, ‗market review‘ would achieve. [43] Similarly, in respect of the T4 increase term, the Applicant submits that the words: “The Park owner may have regard to any factors which it considers may influence the market value of site rents in the Park.” allows the home owner to have an understanding of how the market review is to be calculated. Again I just cannot see how that can be the case. I would ask the question, does a requirement to conduct a Market Review, ―however you want to do it‖ or ―taking account of whatever factors you see are relevant‖ inform a person any more than the simple words, ‗market review‘ achieve on their own. I would certainly answer that question in the negative [44] Again, I cannot see that there is any utility in the use of the additional words in respect of the T4 clause whatsoever. They do not do anything, in my view, to enable the home owner to have any understanding of how the market review is to be calculated. Certainly I cannot see that they serve to provide the Home Owner with any additional level of protection or understanding. [45] One could be mistaken for concluding that the Applicant‘s submission is to the effect that the addition of any words at all, so long as they say something beyond the mere words ‗review to market‘ would be sufficient to satisfy the provisions of Section 69(2)(b). Such a submission would not accord with common sense. One would expect if the Applicant‘s primary submission was correct that the words would have to add something of utility or preferably, give a detailed description of how the market review is to be undertaken. Neither the T3 nor the T4 clauses achieve that. In fact I 11 See Applicant‘s Submissions in Reply filed 19 July 2013 at paragraph 4. 12 See Applicant‘s Submissions in Reply filed 19 July 2013 at paragraphs 9-11. -- 11 of 13 -- 12 consider that they achieve nothing more than what the words in the T1/T2 provisions provide. [46] It is submitted on behalf of the Respondent13 that the concept ―review to market‖ incorporates a process of investigation and determining what is an appropriate market rent. The issue of what constitutes market rent has been the subject of many decisions over the years . By way of example, this concept was considered in the Decision of Bastion and Ors v Lodgecraft Pty Ltd trading as Pine Village Residential Resort [2010] QCAT 237 where the Tribunal considered the definition of ―Market Rent‖ and stated as follows: “The definition of Market Rent was considered by Austin J in Alcatel Australia v Scarcella. At paragraph 46, His Honour says this “….(the) task assigned to the valuer is to determine the market rent value, taking into account all relevant factors. There must be a rent at which a hypothetical willing Lessor and a hypothetical willing Lessee will agree”. As to the concept of “market”, His Honour referred to the definition in Helvering v Walbridge:- “enough competition between buyers and sellers to prevent the exigencies of an individual from being exploited”14. [47] I agree with this submission. In my view there is ample authority to establish the meaning of ―review to market‖. I do not consider that there is any ambiguity within this term and in my view it fulfils the description required by Section 69(1)(b) namely, it is a description of how the increase is to be calculated. The fact that different people may approach a particular market review in varying ways does not detract from the clear meaning of the phrase in any way at all. [48] The Application then, should fail in respect of the 2012 increase. [49] As the terms of the Site Agreement have remained the same in each of the earlier review years in question, namely 2004, and 2008, the Application should also fail in respect of each of those periods. Respondent’s Submissions on Res Judicato/Issue Estoppel/Estoppel by Conduct [50] I note that it is not necessary for me to consider these issues, nevertheless I would note briefly in passing that each of the previous market rent reviews, namely in 2004 and 2008, has been the subject of proceedings before the Commercial and Consumer Tribunal15. 13 See Respondent‘s submissions at paragraphs 90 to 98. 14 At paragraph 5 and 6. 15 The Residents of Gateway Village Resort v Haraba Pty Ltd ATF the Haraba Trust t/as Gateway Village Resort [2005] and Cramp & ors v Haraba Pty Ltd as Trustee t/a Gateway Village Resort – Application MH 006-08. -- 12 of 13 -- 13 [51] It would seem to me, were a contrary view reached, to be relevant to consider the manner in which those proceedings were conducted. Should we consider that matter in detail it would seem likely that there would to be some attraction to an argument that estoppel by conduct at least should have some weight. Nevertheless as stated‘ it is not necessary for me to make this determination. Costs: [52] I am encouraged by the Respondent to permit the filing of submissions in respect of costs. This Application is only one part of the matters to be decided in this proceeding. Should the Member presiding in the substantive Application decide that further investigation of costs is warranted no doubt they can order it, however, it is not my intention to make a separate order in respect of this Application. -- 13 of 13 --