Daleside Pty Ltd and Anor v Turney and Ors [2011] QCAT 240

CITATION: Daleside Pty Ltd and Anor v Turney and Ors [2011] QCAT 240 PARTIES: Daleside Pty Ltd and Dunluce Properties Pty Ltd t/a Beaudesert Garden Estate v Anne Turney, Ray Richards, Flo Richards, Rhonda Kerwin and Alan Trout APPLICATION NUMBER: OCL106-10 MATTER TYPE: Other civil dispute matters HEARING DATE: 9 February 2011 HEARD AT: Brisbane DECISION OF: Mr K R Geraghty, Member DELIVERED ON: 3 June 2011 DELIVERED AT: Brisbane ORDERS MADE: 1. The applicants’ proposed increase in site rent to $108.00 per week in respect of each of the respondents Anne Turney, Ray Richards, and Flo Richards is confirmed, such increase to commence on and from 1 January 2011. CATCHWORDS: Whether proposed increase in site rent is fair and equitable in all the circumstances of the case Manufactured Homes (Residential Parks) Act 2003, ss 70, 71 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr Brian Earp RESPONDENT: Mr Ray Richards -- 1 of 12 -- 2 REASONS FOR DECISION Introduction [1] The applicants at all material times have been and are the registered owners of a residential park called “Beaudesert Garden Estate” located at 339 Brisbane Street Beaudesert in the State of Queensland. This park is a residential park as defined in section 12 of the Manufactured Homes (Residential Parks ) Act 2003 (“the Act”), and at all material times the applicants are and were the “park owners” of that residential park as defined in section 11 of the Act. [2] There are five respondents named in the proceeding. Three of these persons are owners of “manufactured homes” as defined in section 10 of the Act. They are “home owners” as defined in s 8(1)(a) of the Act, but two of the three reside in the same home. Each of the respondents entered into a site agreement pursuant to part five of the Act with the applicants. Two respondents Ms Kerwin and Mr Trout as at the date of this hearing have sold their manufactured home and no longer reside at Beaudesert Garden Estate. There are 34 manufactured homes at Beaudesert Garden Estate. [3] On or about 28 June 2010 the applicants caused to be served on 31 of the homeowners a Notice of Increase in Site Rent based on a review of the site rent payable to market that was conducted outside of the terms of the respondents site agreements and therefore notified pursuant to section 71 of the Act. The other three homeowners were served on or about 30th of June 2010. [4] Approximately 17 homeowners, representing 12 sites, originally provided the applicants with a written response indicating that they do not accept the increase pursuant to section 71(4) of the Act, or did not respond at all. [5] Accordingly, pursuant to section 71(7) of the Act, the applicants on 2 August 2010 applied to the Queensland Civil and Administrative Tribunal for an order that the proposed increase pursuant to section 71(7) of the Act, be confirmed. Background [6] Mr Brian Earp, a director of the Applicant Daleside Pty Ltd, acted on behalf of both of the Applicants at the hearing, and was duly authorised to do so. A director of the other Applicant, Dunluce Properties Pty Ltd was present at the hearing, but did not actively participate. Mr Earp prepared a statement with 21 annexures which I admitted as exhibit 2. Mr Earp also gave oral evidence. [7] The Applicants obtained a report dated 28 May 2010 from an expert valuer Mr Brown, which was the basis for the rent increase. I admitted this report as Exhibit 1, and Mr Brown also gave oral evidence. -- 2 of 12 -- 3 [8] Mr Richards acted on behalf of the remaining Respondents (who were all present at the hearing) and prepared a statement dated 31 January 2011 with annexures which I admitted as exhibit 4. Mr Richards gave oral evidence. His case was that the increase in rent was excessive because of deterioration and non-maintenance of the Park, and the withdrawal of services. He did not attack the validity of the Notice of Increase in Site Rent. Legislation [9] The Application was brought pursuant to the Act. The Act was amended relevantly on 19 November 2010, but because this proceeding started before then (2 August 2010), by section 172 of the Amended Act, the Tribunal must decide the application as if the Amending Act had not commenced. Accordingly, relevantly to this Application, s 70(3) and s 71(1), (7) and (10) of the Act apply–which I set out as follows– 70(3) In deciding the application, the tribunal may have regard to the following– (a) the range of site rents usually charged for comparable sites in comparable residential parks in the locality of the Park, or if there are no comparable residential parks or sites, the range of market rents usually charged for residential accommodation in the locality; (b) the increased site rent compared to the previous site rent; (c) the frequency, and amount, of past increases in the site rent payable under the agreement; (d) any increase in the CPI number during the previous site rent period; (e) the amenity or standard of the common areas and communal facilities; (f) any withdrawal of a communal facility or service previously provided at the Park; (g) any addition of a communal facility or service not previously provided at the Park; (h) any increase in the Park owners operating costs for the Park during the previous site rent period; (i) whether the increase is fair and equitable in all the circumstances of the case; (j) anything else the tribunal considers relevant. 71(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. (7) 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. -- 3 of 12 -- 4 (8) in deciding the application, the tribunal may have regard to the matters mentioned in section 70 (3). (9) 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 . (10) If the tribunal makes an order mentioned in subsection (9)(a) or (c), the order must also state the day from which the increased rent is first payable. [10] Mr Earp’s evidence on behalf of the Applicants was directed towards establishing that the rent increase was reasonable and justified, meeting the factors set out in section 70(3), and relying on the following considerations which I consider to be of some significance– (a) Mr Brown’s expert opinion that the appropriate rent was $108 per week; (b) there had never been a “review of site rent to market” before; (c) there had been no review of site rent pursuant to the site agreements and the CPI since September 2007, when the rent was $88.85 per week. The CPI increase from then until March 2010 was 8.8%, which if used as a base, would mean an increase to $96.67 per week. Local Government charges also increased over this period by $5.48 per week, making a total of $103 per week on these criteria alone, without looking at the market. (d) 32 of the 34 sites were already paying the $108 per week. (e) The increase was affordable for pensioners because the percentage of the single pension attributable to rent had dropped from 36.31% in 2000, to 30.16% in September 2010; and because the rent assistance paid to pensioners would increase with the rent increase, so that the extra payable by a home owner would turn out to be $4.75 per week, not $19.15 per week. (f) the rent of $109 includes GST (g) the rent is one of the lowest in Queensland for a dedicated manufactured home Park. (h) it would be unfair to the 32 sites already paying the increase to $108 per week if the remaining two sites could avoid the increase. [11] I accept the facts as set out in Mr Earp’s statement (Exhibit 2), but will discuss the implications from these facts later. Mr Brown’s report (Exhibit 1) considered the rents at five other residential parks which he had inspected, and which he considered comparable, the rents of those parks ranging from $110 per week to $126.30 per week. -- 4 of 12 -- 5 [12] Mr Brown referred to Beaudesert Garden Estate as having facilities or services , those being a clubhouse with an open plan, with a dance area , a meals area, a kitchen, a library area, and a billiard table; an outdoor pool; a barbecue facility (removed during civil works); and on-site management. He noted that the barbecue facility had had an awning, a timber table, a brick base, and a four burner barbecue (next to the pool), but it had been demolished to make way for an extension to the internal road. It was required to be rebuilt when the road extension was complete. [13] “Greenbank Gardens” at Park Ridge, which was said by Mr Brown to be comparable, had additional facilities to those at Beaudesert Garden estate, including a games room with billiards, table tennis and gymnasium, two pools, a bowling green and clubhouse, a workshop, a tennis court, a community bus, a putting green and driving nets, and a security gate. It was close to a shopping centre, an RSL, and a tavern. The rent there was $126.30 per week. [14] “Palm Lake Resorts” at Bethania, (also said to be comparable), had an open plan clubhouse with a dance area, meals/lounge area, commercial kitchen, centralised pay TV service, library, billiard tables and craft room. It also had a gymnasium, workshop, resort style pool, indoor heated pool, gated security, competition outdoor lawn bowls, free shuttlebus to local shopping facilities, caravan and trailer storage, hairdresser and medical rooms, barbecue facilities, and resident managers. The rent there was $120 per week. [15] “Claremont Resort” at Park Ridge has a clubhouse with open plan, an area for dancing, meals/lounge area, kitchen, library, and a billiard table; a workshop; outdoor resort style pools; barbecue facilities; bowls rink; resident managers; and security gate. The rents in this resort range from $98.47 to $122.26 with the most common rental being $120.80. [16] “River Glen Haven” at Waterford has two clubhouses with an open plan for dancing, meal/lounge, kitchen, library, and billiard table; a building for arts and crafts and workshop; two outdoor resort style pools; a hair salon and medical room; barbecue facilities; and a gymnasium. The rents range from $105 per week in the older section which is due for review through to $121.10 per week which is the new level being paid in the newer section of the estate. [17] “Chambers Pines Village” at Chambers Flat, has a clubhouse with an open plan for meal/lounge area, kitchen, and gymnasium; a security gate; an in ground solar heated pool and spa; barbecue facilities; a one-lane lawn bowls rink; and a convenience shop. Mr Brown considered that this estate had inferior facilities in comparison to larger estates, but the current lower rental of $105.04 per week was considered by him to be out of line. However all new residents were being charged $110 per week. [18] Mr Brown considered the subject estate to be inferior to the previously mentioned estates. However the subject estate was the smallest estate -- 5 of 12 -- 6 and therefore did not require larger facilities. The closest in comparison, although slightly superior, was Chambers Pines which offered good facilities which were relatively newer and also benefited from the convenient shop attached to the caravan park component. Chambers Pines was also under construction and although the estate had inferior facilities in comparison to larger estates, the current lower rental was considered by Mr Brown to be out of line. Greenbank Gardens and Chambers Pines were scheduled to increase rents in July 2010. He calculated on the basis of CPI that the new rents would be $129.40 (average) and $113.30 (applied to higher rent) respectively (not including local Government charges). [19] With respect to the amenity or standard of the common areas and communal facilities, Mr Brown observed the external presentation of the subject Estates clubhouse to be fair, however requiring new paint. Internally the clubhouse was clean and well presented. Conversations with residents revealed that the clubhouse was not up to their standard of cleanliness; however, on the date of inspection he did not observe anything that would indicate major neglect. He also noticed the letterboxes to the subjects frontage were in need of replacing. The estate was undergoing construction of 15 new sites and civil works had inconvenienced residents. The dust from the site was causing the pool to be slightly unclean, however as it is not heated, the use of the pool at the present was limited. He also noticed the rotunda area adjacent to the pool was in need of repair. [20] In Mr Brown’s opinion, the subject estate was well below market and had not had an increase since September 2007. If the estate had incurred CPI and rates increases, rents would currently be at $103.18 per site per week. This rent would appear to be in line with current rents from other estates mentioned. This rent however did not allow for CPI increases in July 2010 to other estates (Greenbank Gardens and Chambers Pines). Therefore, in adopting a reasonable market rent for the subject he determined that the rental should not exceed the imminent increase of Chambers Pines of $113.30 per week, nor should it lag too far behind. He therefore considered a rent of $108 per site per week to be reasonable for the subject estate. [21] Mr Brown went on to say that he had also considered the current construction of 15 new sites which was inconveniencing the residents plus removal of the barbecue area and bins. He had been advised that the construction of the new sites and reconstruction of the barbecue would be completed within the next three months. This timing coincided with the determination date of 1 September 2010. He was also advised that once the ring road was complete, this would provide an opportunity for council garbage collection to return to the estate. Further discussions with the owner revealed a general tidying of the estate plus installation of new letterboxes. Therefore, in this instance, he did not consider a rebate for the temporary inconvenience from construction was valid. -- 6 of 12 -- 7 [22] I accept the factual matters set out in Mr Brown’s report and I will discuss what implications these facts might have. [23] Mr Richards’ evidence relevantly was that Beaudesert Garden Estate lacked facilities common to other parks, as well as services having been withdrawn and the Park being in a state of disrepair. The matters that he raised which I consider to be at least of some significance are as follows– (a) the five parks referred to by Mr Brown could not possibly be conceived as being comparable since they were situated in areas which were in reasonably close proximity to the Brisbane city boundary with all the facilities that this entailed, such as regular public transport (bus and/or train), proximity to major hospitals and specialist services, major shopping centres and entertainment venues. In comparison, the subject estate was situated in the rural township of Beaudesert with a travelling time of between one and a half and two hours to Brisbane and was the only manufactured home Park in the town. It was twice the distance from Brisbane and Brisbane’s facilities as were the five parks used in the comparison. The subject estate had one bus weekly which would pick up shoppers outside the park and take them to the local shopping centre. (b) The five parks referred to by Mr Brown had facilities, services, amenities, security, maintenance, and general presentation that far exceeded anything available at the subject estate. The facilities at those five parks include swimming pools (some heated), bowling greens, tennis courts, golf putting greens, barbecue areas, large fully equipped recreational halls, including kitchens, gymnasiums, libraries and services such as free private bus transport to major shopping centres and outings, as well as security features such as gated entry, lighting, and fencing. In comparison, the facilities at Beaudesert Garden Estate were limited to a poorly maintained, often unusable, postage stamp sized swimming pool, and a small, badly run-down community hall lacking in equipment. [24] At the time of the hearing, no new barbecue area had been put in place, although a portable barbecue had been put on the hall verandah at Christmas 2010. [25] Mr Richards also complained that on 23 September 2009 the refuse collection service was terminated and the bins were removed and replaced by smaller receptacles that the elderly and infirm residents were obliged to trundle out to the front gates of the Park and load into an industrial bin which was constantly overflowing. This situation remained for more than 18 months. The wheelie bins were returned on 11 November 2010. [26] Mr Richards complained that the pool was not in a safe, usable condition, owing to the presence of dirt and algae, but a more sinister condition occurred when the pool looked clean but in fact lacked any chlorine, with -- 7 of 12 -- 8 the obvious dangers. The pool water had been tested at a pool shop on several occasions in November 2010 and on one occasion the test revealed “no pool water sanitation–chlorine reading nil” and “distinct presence of green algae formation”. A test five days later showed that green algae were still present and the pool was well above the recommended levels for alkalinity. [27] Mr Richards said that the Park manager was responsible for the weekly cleaning of the community hall, and before and after functions, but there was no evidence that this happened, with dirt and cobwebs in profusion. The manager was also responsible for repairs and maintenance but this was not happening, with the doors to the hall being in dire need of repair; for some time exterior lights had stopped working, being disconnected instead of being replaced and garden overgrowth was blocking entrances. [28] A further complaint was that ancient wood mailboxes had been in need of replacement for quite some time and could not be considered as being maintained in a reasonable condition. The applicants had been told that new mailboxes would be installed when the new houses were constructed. Mr Richards noted that not one single new house had been commenced. He thought it could be years away. [29] Communal gardens were often permitted to get to a stage of extensive overgrowth intruding onto pathways, especially around the entrances to the community hall, where they formed a hazard to the elderly residents, and passing through them became extremely unpleasant in wet weather. Overgrowth in some areas had become a hazard to vehicles and pedestrians by blocking the view. A group of residents had taken it upon themselves to tidy the front entrance to the park. [30] There were no foot paths and roadways had to be shared by both vehicles and pedestrians. Lengthy periods of non-maintenance had caused the roads to suffer severe deterioration. A patch-up job was performed on 14 and 15 September 2009. The repair work on the roads was already breaking down due to the fact that no solid foundation was laid to support the top surface. The roads were once again a tripping hazard in several places for the elderly pedestrians, and in the extreme temperatures of a Queensland summer, the exposed tar could turn into a semi-fluid form, with the resulting dangers if residents came into contact with it. [31] Mr Richards also said that there was no concrete footpath, just a grass verge, for 700 m from the park towards the shops, which caused difficulty for elderly residents. [32] Mr Richards annexed brochures from the 5 “comparable” parks to his affidavit, which showed photos and gave descriptions of their facilities. This material gives a more detailed picture than appears in Mr Brown’s report. For example, Greenbank Gardens has an extensive library with lounge chairs, and tea and coffee facilities. It also has an entertainment room with a theatrical stage [stage lighting and curtains], microphones, -- 8 of 12 -- 9 organ, amplifiers, and sound equipment. One of the two pools is designed for non-swimmers and water aerobics. [33] Palm Lakes has computers; a photocopier; a fax; plasma TV’s; a sound system; indoor bowls; a grand piano; landscaped grounds; and a lake. Activities include aqua aerobics and taichi. The swimming pool is heated. [34] Claremont has an extensive library, computers, a new fitness centre including indoor heated pool, sauna and spa, as well as an outdoor pool. [35] River Glen has security gates and fencing; a bus stop outside the entrance; free village bus to clubs and markets 3 times a week; transportation to shopping centres twice a week; a well stocked library; lawns mowed; a visiting hairdresser; activities include indoor bowls, taichi, and aerobics. [36] Chambers Pines has its lawns mowed and maintained; and has a 2 rink bowling green and adjoining golf links. [37] In his oral evidence, Mr Richards made what I considered to be a telling point in saying that the rent should reflect the facilities and services presently at the Park, rather than what they might be in the future. He also said residents had to mow their lawns, or pay for it, and he paid seven dollars a time while others paid more. [38] I also accept the facts set out in Mr Richards’ evidence, although the effect of some of the complaints appeared to me to be somewhat overblown. There was in fact only one challenge to any of the applicant’s evidence, that being as to whether residents or the Park manager cleaned vegetation at the front Park, or to what extent both were involved. I do not consider this to be particularly relevant – the cleanup was done one way or another. I do however make the following comments about Mr Richards’ complaints– (a) As to the complaint about refuse collection, I note that the problem was only temporary, and occurred because of an internal road extension which allowed council rubbish trucks to continue along the road instead of having to do a three-point turn and thereby cause damage to the road surface. (b) As to the pool, I note that Mr Earp said that the lack of chlorine and the algae was caused by the necessary removal and reinstatement of the pool filter to allow the development of 15 further sites, and during this procedure, the impeller of the pump was damaged so that when reinstalled it did not function. When the pump was repaired, the pool gradually recovered and in recent times there has been no problem. Mr Richards did not dispute this. (c) As to the lack of cleaning, Mr Earp admitted that there had been a lack of it, but he had spoken to the manager and was now not a problem. The door would be repaired in the near future. -- 9 of 12 -- 10 (d) As to the mailboxes, Mr Earp said that they would be replaced in April 2011. (e) As to the deterioration of the roads, it appears that there are only two or three small places where there is a breakdown in the surface, possibly caused by the excessive rain in the recent months prior to the hearing. (f) As to the lack of a concrete footpath for 700 m from the entrance to the park, I note that the council is supposed to have built a heritage trail, but this has not happened. Be that as it may, there is no concrete footpath which might possibly reduce the attractiveness of the Park slightly. [39] In his oral evidence in response to questioning, Mr Brown conceded that Beaudesert Garden Estate was not of the same standard as the five “comparable” parks, and not in as good a location, being further from Brisbane, and that these were factors which would indicate a lower rent. Accordingly Beaudesert Garden Estate rent should be at the lower end of the range. [40] Similarly, Mr Brown conceded that the mailboxes needed repair and that he had been told that they would be upgraded when the rain stopped and the builder came back from sick leave. He would consider that against the rent if it was not dealt with in due course. [41] Mr Brown also conceded that there had been an overgrowth of vegetation, but he was sure it would be attended to. [42] Mr Earp under questioning said that he had already agreed with a builder, Mr Love, to reinstate the barbecue and gazebo and table, and repair the letterboxes, but that Mr Love had become ill, and it had been very rainy. He now thought Mr Love would not be able to return to work, and was negotiating with the builder who was going to build 15 new homes on the 15 extra sites, to carry out these works as well, and he was hopeful that the barbecue area and letterboxes would be done in April. Mr Earp also conceded there had been a growth of vegetation. Discussion [43] As is usual in these cases, the respondents have not provided any countervailing expert valuer’s report, which makes it very difficult for the Tribunal to make findings contrary to the expert, particularly when the Tribunal has not inspected the subject park, or the five “comparable” parks. [44] The Respondents are therefore restricted to attacking the factual basis upon which the report stands, which they have attempted to do. [45] From the photos of the different parks and the descriptions of their facilities, it seems to me that the “comparable” parks are very much superior to the subject Park, both in aesthetics and facilities. They are -- 10 of 12 -- 11 much nearer to Brisbane, and therefore nearer to the large hospitals, specialist medical services, large shopping centres, and so on. The fact that the comparable parks all have security gates, and at least in some cases, fencing, whereas Beaudesert Garden Estate has none, is, I think, an important factor. It would appear that in reality, they are only used as comparable parks because they are the closest to Beaudesert Garden Estate, although I do not think that they are therefore necessarily in the “locality” of Beaudesert Garden Estate, as referred to in s 70(3)(a) of the Act. [46] Even Chambers Pines, which is $110 per week rent, is 45 min closer to the Brisbane CBD, and appears to have a better appeal and standard, as well as having bowls, golf next door, a spa, a workshop, a convenience store, and security, than Beaudesert Garden Estate has. It is therefore difficult to see why the proposed rent for Beaudesert Garden Estate is only two dollars per week less, particularly in the circumstances where Chambers Pines includes mowing in the rent. [47] On the other hand, as I have said, I do not see how I can overturn Mr Brown’s expert opinion without countervailing expert opinion. Mr Brown says that Chambers Pines is below market in any event, and the CPI and local government charges would make the rent $103 per week without reference to the market at all. Apparently there are no directly comparable parks to give a starting point; and rents are often determined by the price of buying a home in the park, with higher purchase prices being ameliorated by lower rents. Therefore I do not feel that I can overturn Mr Brown’s opinion, when these factors exist. I have to rely on his expertise. [48] On the other hand, Mr Brown did indicate that he took into account the imminent replacement/repair of the barbecue facility and the letter boxes, and suggested that the rent assessed by him would not have been as high, had he not been assured that these items would be fixed within three months, that is by (say) 1 September 2010. [49] Mr Earp was hopeful that these jobs would be done by April 2011, but in fact has no agreement with anyone for the work to even be done, let alone be finished by a specific time. He is simply negotiating at present. [50] As I have said, I think there is merit in the argument that the rent should reflect the facilities and services presently at the Park, rather than reflecting some future expectation, which is not even now at all certain. I therefore take the view that if Mr Brown had been advised originally that the fixing of the mailboxes and replacement of the barbecue facilities would not be done until April 2011 (or even later), this would have meant assessment of a lesser rent. I do not know what the reduction may have been, so I consider that it is fair and equitable in all the circumstances to order that the rent increase begin from 1 January 2011, being four months later than the original rent increase. This still means that there are four months to go without facilities being repaired, so is a compromise attempting to take into account that an assessment of rent taking into -- 11 of 12 -- 12 account the lack of the two facilities would not have meant that the original rent would have remained untouched. [51] This will mean that the respondents will be favoured slightly as compared with the homeowners who agreed to pay the increased rent, but this tribunal must act on the evidence, and try to do justice to the parties, and accordingly should not be influenced by the actions of persons not parties to the action. [52] Accordingly, I order that the applicants’ proposed increase on site rent to $108 per week in respect of each of the respondents Anne Turney, Ray Richards, and Flo Richards is confirmed as from 1 January 2011. -- 12 of 12 --