Commissioner for Fair Trading v Caraco Pty Ltd [2006] NSWSC 795

New South Wales Supreme Court

CITATION : Commissioner for Fair Trading v Caraco Pty Ltd [2006] NSWSC 795

HEARING DATE(S) : 07/08/06 JURISDICTION : Equity Division

JUDGMENT OF : Young CJ in Eq

EX TEMPORE JUDGMENT DATE : 08/07/2006

DECISION : Application for order for appointment of administrator refused.

CATCHWORDS : REAL PROPERTY [453]- Caravan Park- Application for appointment of administrator- Matters to be considered.

Fair Trading Amendment Act 2003 LEGISLATION CITED : Public Sector Employment and Management (Miscellaneous) Order 2006 Residential Parks Act 1998, ss 136F, 136G and 136L

Commissioner for Fair Trading (P) PARTIES : Caraco Pty Ltd (D1) Blackington Pty Ltd (D2) Warren Eric Tschannen (D3)

FILE NUMBER(S) : SC 1439/06

COUNSEL : P Griffin (P) I Wales SC (D)

SOLICITORS : David Ian Catt (Office of Fair Trading) (P) Cochranes Lawyers (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in EQ

Monday 7 August 2006

1439/06 – COMMISSIONER FOR FAIR TRADING v CARACO PTY LTD JUDGMENT 1 HIS HONOUR: The plaintiff seeks an order pursuant to s 136F of the Residential Parks Act 1998 that an administrator be appointed to the Banora Point Caravan Park. That section empowers the Court to appoint an administrator who may exercise all the functions of a park owner of a residential park. The section empowers the Director-General of the Department of Commerce to apply for an order under the section only if she is of the opinion that, so far as the present case is concerned, the well-being or financial security of the residents of the residential park is at risk. Section 136G provides that the Director-General is not to apply for an order appointing a person as administrator unless the person has consented in writing to the appointment. 2 the Banora Point Caravan Park is situated alongside the Tweed River in the north of the State of NSW. It is a park which has two main classes of residents, namely, 'A' - those who have their own van or relocatable home, and 'B' - those who occupy vans or accommodation provided by the park owner. The evidence quite clearly shows that living in the park for many of the last five years has not been a very pleasant experience. In class A are a number of elderly persons who have felt very much inconvenienced by a number of factors, the principal ones being the behaviour of the persons in class B and their associates, and also the fact that the standard of maintenance of the park has not been to the standard which they expect. The evidence from police officers shows that there have been far more calls upon their time for this park than one would have expected in the case of a well run caravan park. The records of the relevant administrative tribunal in the area also shows a very large number of problems which have been brought to its attention, mainly by applications by residents, though there have been some applications by the defendants or one or more of them with respect to non-payment of rent. 3 In one sense, the problems were bound to occur. The class B residents included some people who were introduced to the park by their parole officers, and other persons who in the past were not able to obtain any other accommodation except accommodation in the park, and it would appear that a sizable percentage of the class B residents were unemployed or their associates were unemployed and spent their days in annoying habits that affected the more elderly residents. So one can well see why the Director-General came to the opinion that the well-being of the residents of the residential park was at risk. 4 However, when the Court is asked to consider whether to appoint an administrator under s 136F, it must look to see whether there will be any appreciable benefit or improvement in the well-being or financial security of the residents by the appointment. I accept that there has been considerable angst through the disturbances caused by class B residents and their associates. Indeed there is no contrary material. For a number of reasons this problem has been alleviated because many of them have now left. However the real question is whether the appointment of an administrator would be conducive to the increased well-being of the residents. 5 This is allied to another question, and that is whether the administrator proposed by the Director-General is appropriate. The Director-General has nominated a Mr Robert McKeen, a former Detective Inspector of Police, to be the administrator. Because of s 136G of the Act he is the only person who can be the administrator. Mr McKeen gave evidence as to his experience, apart from his police service, and it was that he had managed a block of home units at Hornsby. He came under vigorous cross-examination from Mr Wales SC, who appeared for the defendants, as to whether he possessed the characteristics that it would be necessary for an administrator to have in order to advance the well-being of the residents. The cross-examination was devastating and firmly established that Mr McKeen not only did not have much idea as to what was required of him, that he showed no qualifications at all, but also he was a positive danger because of his ignorance in the required matters. He may very well have entered into agreements with people wanting to come into the park which would have serious consequences for the park owner in that those persons may then get semi-permanent tenancy rights of which the park owner would have had no chance to oppose. 6 Mr McKeen's usual answer to questions is that he would rely on the Department to give him the appropriate guidance and advice, but that is not what one can expect of an administrator who is to take the place of the park owner and enhance the well-being of the residents. It was put to Mr McKeen that there was a shop on the site and how would he run that and how would he stock it, and he gave no answer. Indeed, it would seem that what he would do was merely close down the store which would then mean, presumably, that the housebound residents would have to get delivery from local traders at their own cost or find their own way to local supermarkets. 7 The position is exacerbated by s 136L of the Residential Parks Act 1998 which provides that a matter or thing done or omitted to be done by an administrator does not, if that was done in good faith for the purpose of executing the Act, subject the administrator to any action, liability, claim or demand. Accordingly, whilst at present the residents can and in fact have commenced proceedings - because there are, I think, twenty-three applications before the local tribunal for relief against the owner - they could not commence any proceedings against the administrator at all, nor could they hold him accountable for what was to be done. 8 Though there was accompanying, as annexure A to the summons, a set of terms of appointment of the administrator, I would have thought that it was necessary for the plaintiff to provide some evidence that the Department was going to honour those terms and had sufficient budgetary allocation to be able to fulfil that promise. There was no such evidence. 9 However, Mr Griffin, who appeared for the plaintiff, in his final address asked for leave to reopen to show that the funds would be there to back the administrator. This application was opposed by Mr Wales and in the end it petered out because I said I would assume that the Department would carry out the terms of appointment and fund it accordingly, but the unsuitability of Mr McKeen would probably mean that the point was otiose. 10 The terms of appointment are not at all satisfactory. They say the administrator's remuneration and expenses must be paid out of the receipts of the business of the residential park. Now the clear evidence was that the park has received no new residents since May and that, for a number of reasons - not the least of which there is some doubt as to whether the functioning of the park is in accordance with the appropriate Local Government consents. At the moment the evidence is that the costs of running the park are about $6,000 a week and the income is about $2,500 a week, and that the present controller of the company which is the present owner is funding the deficit. 11 If what is presently being done is inadequate so far as lighting and repair of roads is concerned, then the weekly cost will be in addition to the $3,500 deficit. 12 The scheme of the appointment is that the administrator will be paid $100 an hour exclusive of GST for his work, that he is not to employ his wife (this is significant because the proposed administrator gave evidence that whilst he was to a degree computer illiterate, his wife was an expert), that his remuneration and expenses, if insufficient, were to be the subject of an invoice for any unpaid amount and, "the Commissioner will consider the invoice having regard to cl 3.4 and compensate the administrator as applicable", whatever that means. It is also not clear whether the administrator is only to be reimbursed if he has first paid out moneys or whether the Commissioner will "compensate ... as applicable", for situations where the administrator has run up a bill but has not had the funds to pay it. 13 In the past there was quite clearly a problem with the class B residents and one would have expected under normal conditions that the park owner should have employed sufficient security personnel to deal with the problem and have eviction notices for those who did not comply with the park rules to keep their children and associates in proper control; but one has got to live in the real world. Employing security personnel costs money and there must be a limit to the expenses that a park owner has to pay out in order to provide security, as compared with the rent which he is acquiring from the residents. Indeed, a part of the Act itself seems to suggest that that is so because there are references in some of the sections as to bearing in mind the amount of rent that is charged for the accommodation. Secondly, when there is protection of tenants by tribunals, so that even if the owner does try to have a person evicted, that attempt may not succeed because there is a tribunal there to protect tenants, it is very difficult to say that merely because a disruptive resident continues to reside on the park that the owner is at fault without clear evidence that the owner has not taken all reasonable precautions to have the person removed. In the instant case there is clear evidence that these class B people have been causing a nuisance, but the evidence of the second part is lacking. 14 Then so far as the lighting and the garbage and the condition of the roads is concerned, again, those are matters which require more money to be invested if the present conditions are not satisfactory. There is no material to suggest that an administrator would have the capacity to do any more about this than the present owner. It would have been necessary to obtain some evidence that not merely what is there is unsatisfactory, but what needs to be done and how much it is going to cost and who is going to pay for it and that is lacking. 15 So, accordingly, even though I very much sympathise with the residents of the park, it does not seem to me that there is any point in appointing an administrator because it has not been demonstrated that the well-being or financial security of the residents will be any better off and it is also clear to me on the balance of probabilities that the only proposed administrator would not have the capacity to do that in any event. 16 I should mention one other thing, and that is that the proceedings were commenced in the name of the Commissioner for Fair Trading. The Act requires that it is the Director-General who is to apply to the Court. The Fair Trading Amendment Act 2003 suggests that the person who holds the office of the Commissioner for Fair Trading is also to be considered to be the Director- General and there is an Order, namely, the Public Sector Employment and Management (Miscellaneous) Order 2006 which says that the reference to Director-General in s 3 of this Act is to be construed as a reference to the Commissioner for Fair Trading. I have great doubts as to whether either of those provisions is sufficient to allow the Commissioner in her own name to apply to the Court. However, the proceedings were amended to be in the name of the Director-General, an amendment to which the defendants consented, so that I do not have to decide that particular problem. I think, however, in future it would be preferable if the plaintiff was shown as the Director-General. 17 Thus, the proceedings fail. The summons must be dismissed with costs.