LAND LEASE COMMUNITY NEWS

Site fee increase disputes at NCAT

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Excessive site fee increases rarely make it to the NSW Civil and Administrative Tribunal (NCAT) since the introduction of the compulsory mediation process. However, in 2017 some home owners at Gateway Lifestyle Redhead could not reach an agreement with the operator and they did go to the Tribunal.

Pam Meatheringham is a longtime advocate who lives in the community. Pam was one of the applicants and she represented around 80 home owners with assistance from Ann Davy (home owner) and Jock Plimmer, an advocate from the Central Coast.

The operator was seeking a site fee increase of $6.50 per week and the home owners argued that it was excessive because the operator had failed to carry out any repairs or maintenance since the last site fee increase. Also, that maintenance had been inadequate and conditions in the community had deteriorated.

The operator said the increase was necessary due to an increase in costs. In evidence the operator provided a statement from its Chief Financial Officer and an extract from its accounting software comparing costs for May and June 2016 with those for May and June 2017. The operator claimed a 16% increase in operating costs.

One of the difficulties for home owners challenging excessive site fee increases has always been evidence – having to disprove the operators claims without access to the evidence that operators refer to but rarely provide. This case was no different – the operator referred to an increase in costs and quantified it at 16% but did not provide any documentary evidence.

The home owners argued that the increase should not be granted because the operator failed to provide evidence of the actual costs in the site fee increase notice (which is required by law), nor sufficient evidence to support the contention that the costs had increased as claimed.

NCAT determined the site fee increase should be limited to CPI, an increase of 2.4%. In coming to the decision the Tribunal found “as the operator has not provided sufficient evidence to support the claimed increase in costs and outgoings, and has not carried out required maintenance and repairs until proceedings were taken and an order obtained, the Tribunal is satisfied that it would not be just and equitable for the site fees to be increased by any greater amount.”

The actual increases for home owners are between $3.62 and $3.92 a week, which is a great outcome.

Home owners from Colonial Tweed Holiday & Home Park also went to NCAT regarding an excessive site fee increase when they were unable to reach an agreement with the operator. The operator was seeking an increase of $8.50 a week, which they claimed was “required to help maintain the continued viability of the community.”

Home owners were represented by Ken Cummins (also an applicant) and Don Bennett of ARPRA (Affiliated Residential Park Residents Association).

Like Redhead, the operator presented a statement to the Tribunal, prepared by their accountant, that costs had increased. The claim was that the increase in outgoings and operational expenses was 8.38%. The operator did not present any figures or a breakdown of any of the costs. The Tribunal noted that “there are a number of issues with the case presented by the park owner, the most obvious is that there is no material before me that allows me to determine the increase needed to cover an actual or projected increase in the outgoings of the community.”

On behalf of home owners Mr Cummins submitted the increase should be restricted to CPI (Consumer Price Index) of 1.9%. Also that “little has been done for the home owners” to warrant an increase.

In making the decision the Member said “It could be argued that no increase has been established because the evidence provided does not allow scrutiny or challenge. However, I am cognisant of the obligation to ensure the community can continue to operate in a financially viable manner.” An increase of $6.90 a week, approximately 4.5% was allowed.

Commentary

NCAT operates under the Civil and Administrative Tribunal Act 2013. One of the Objects of Act at section 3(e) is “to ensure that the decisions of the Tribunal are timely, fair, consistent and of a high quality.”

In the two decisions above the operators failed to provide evidence of their increases in costs and instead relied on financial statements showing percentage increases.

In one matter the Tribunal found the evidence was insufficient and allowed only a CPI increase. In the other the Tribunal found there were a number of issues with the case presented by the operator but an increase of 4.5% or $6.90 a week was still allowed.

It is arguable that the decision in the second case is not fair because it is not based on evidence, but on an assumption about what the operator may need to “continue to operate in a financially viable manner.” A comparison of the decisions does not indicate consistency and so it appears NCAT may be falling short of this Object when it comes to site fee increase disputes.

 

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