Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Noelene Clements v ZW2 Pty Ltd t/as Lake Munmorah Residential Resort [2015] NSWCATCD 37 Hearing dates: 10 March 2015 Decision date: 02 April 2015 Jurisdiction: Consumer and Commercial Division Before: P Hunter, General Member Decision: The application is dismissed Catchwords: RESIDENTIAL PARK – rent increase Legislation Cited: Residential Parks Act 1998 Category: Principal judgment Parties: Noelene Clements (applicant) ZW2 Pty Ltd t/as Lake Munmorah Residential Resort (respondent) Representation: Ronald Squires(applicant) Belinda Lees(respondent) File Number(s): RP 15/01307 Publication restriction: Unrestricted reasons for decision Procedural History 1. This application was filed on 10 January 2015. The proceedings were commenced in the name of Mr Ronald Squires. Mr Squires was an occupant under the residential site agreement between the respondent and Ms Noelene Clement. Without objection from the respondent the application was amended to name Ms Noelene Clement as the applicant. 2. In the application an order had been sought that a proposed rent increase, notified by letter dated 11 December 2014, of $12.19 was excessive, and that any increase should only be a CPI increase of not more than $3.71. 3. The matter first came before this Tribunal on 28 January 2015. Directions were made for the parties to lodge documents and the matter was set for hearing. Issues 1. The statutory provisions relevant to this application are found in the Residential Parks Act 1998 (the Act). 2. Under s 55 of the Act, a resident may apply to the Tribunal for an order that a rent increase was excessive not later than 30 days after being given notice of the rent increase. 3. The notice was posted to the applicant on 11 December 2014 and the Tribunal is satisfied that it has been brought within time. 4. Section 57 of the Act sets out the matters to be considered by the Tribunal in determining rent applications, which includes the following factors; 1. the general market level of rents for comparable premises in the same residential park and in other residential parks in the locality or a similar locality, 2. the value of the residential premises, 3. the frequency and amount of past rent increases under the residential tenancy agreement or previous residential tenancy agreements between the same park owner and resident, 4. a general price index (such as the Consumer Price Index), 5. the conduct of the parties, 6. the amount of any outgoings in respect of the residential premises required to be borne by the park owner under the residential tenancy agreement or proposed agreement, 7. the estimated cost of any services provided by the park owner or the resident under the residential tenancy agreement or proposed agreement, 8. the value and nature of any fittings, appliances or other goods, services or facilities provided with the residential premises, 9. the accommodation and amenities provided in the residential premises and the state of repair and general condition of the premises, 10. any work done to the premises by or on behalf of the resident, to which the park owner has consented, 11. any other relevant matter. 1. The Tribunal thus proceeded to consider each of the factors under s 57. General market level of rent for comparable premises 1. Lake Munmorah Residential Resort ('the Park") comprises some 223 sites. 2. The applicant argued that the explanation for the rent increase provided by the respondent, that it was seeking parity of rents for all residents within the Park, was an anomalous proposition as there were substantial variations between lots. Particularly those located on street corners and the Park boundary. Upon entry into the Park the applicant was advised that a premium was charged for corner or boundary sites. Further it was not considered that a higher figure of $166.05 previously found by this Tribunal, as differently constituted in proceedings RP 13/60599, was a realistic base figure from which the respondent should be calculating further rental increases. The applicant also argued that as there were different amount of rent increases for different residents and the respondent had made several offers to negotiate the rent increase to some residents of different amounts, then there would be no true parity. 3. The respondent submitted that it was their intention to achieve parity for all rents in the park by increasing or decreasing the existing rents as of 19 February 2015. It was submitted that the current rent paid by the applicant is less than that offered to residents who are continuing to move in to the Park, for those residents the current market rent was $170.73 per week. The parity rental figure adopted was $169.71; this was a CPI increase on a rent for some premises fixed by the Tribunal in proceedings RP 13/60599. Evidence was also provided that the parity of rents within the Park was also an issue that had been agitated for by the residents committee. With respect to the current increase, evidence was provided that aside from the respondent, 78 other residents had opposed the rent increase and brought an application to the Tribunal. The proceedings with all other residents had been settled with an agreement that would stage in the rent increase but see all residents paying parity by March 2016. This offer was also extended to the applicant but was refused. The remainder of the residents of the Park had accepted the increase/decrease and were paying rent in the sum of $169.71. The respondent argued that as $169.71 it was paid by the majority of residents in the Park it was the best evidence of the general market level. 4. The respondent also submitted evidence that other parks in the locality with far less amenities are charging a higher rental. Information of suggested comparable parks was submitted, being Kincumber Nautical Village, Teraglin and Bevington Shores, together with a schedule of their respective amenities. Value of the residential premises 1. The applicant did not submit any information in relation to the value of the residential premises. The residents own their own homes and they lease the land on which the home is erected. 2. The respondent provided a schedule of assets comprising of the Park as at 2006 with a total value of $14,857,573. A CPI increase of this figure provided a current estimate of $18,854,967, or alternatively a calculation based on the current market site value per site would give a total capital value of the Park of $19,127, 673. Further it was argued that the rate of return received by the Park owner even on the higher valuation was less than the market yield of 9.25%. 3. The respondent also submitted a statutory declaration its employee salesperson, Ms Suzie Greentree. Ms Greentree has been employed by the respondent since August 2014. Since that time she lists 9 residential homes for which she has negotiated a sale, and gives evidence of an average profit of $55,533.10 per home. Ms Greentree further deposes that she has details of 60 prospective clients that she has shown through the Park and it has not previously been communicated to her that the rents are too high. Frequency and amount of past rent increases 1. The applicant moved into the Park in 2008, and with the exception 2013, rent increases were generally in line with increases in the CPI. The respondent confirmed that the applicant had been issues with five rent increases since entering the Park and that with the exception of the current increase all had been at CPI. General price index such as the consumer price index 1. Both parties agreed that the relevant CPI figure was Sydney All Groups, yet they were taken from different dates. The applicant took the figure from the previous financial year and submitted the figure was 2.205%. The respondent took the figure from September 2013, at 2.3 %. The conduct of the parties 1. The applicant told the Tribunal that there had been no attempt to negotiate directly with the respondent as it was claimed that the respondent had in the past ignored correspondence. Further the applicant drew attention to the fact that the respondent did not appear when the matter was first listed before the Tribunal. 2. The respondent confirmed that it was firm in the intention to achieve parity of all rents in the Park within the next 12 months, however the manner in which this was achieved had been open to negotiation and several letters had been sent to residents offering to stagger the increase. This was an attempt to take into consideration the individual circumstances of different residents, rather than resile from the position of parity as suggested by the respondent. Some offers had been accepted by several residents and it was communicated to the applicant several times during the hearing that a similar offer remained open to the applicant. The amount of any outgoings and the estimated costs of services provided by the park owner or resident 1. The applicant did not produce any evidence in relation to this issue. The respondent submitted that there had been a 16.21 % increase in property and water rates between the 2011/2012 and 2012/2013 financial year and a 18.98% increase between the 2012/2013 and 201/2014 financial year. A scheduled of the 2012/2013 expenditure was also provided. The applicant agreed that most of the expenses listed were justifiable in respect of the operation of a residential park. The value and nature of any fittings, appliances or other goods, services or facilities provided with the residential premises 1. No evidence was submitted by either party for this factor for consideration. The accommodation and amenities provided in the residential premises and the state of repair and general condition of the premises, 1. The applicant submitted that the respondent had not added to, improved or in any way enhanced the facilities at the Park during the last seven years. Further it was claimed that a sauna and spa tub had been removed from the list of amenities, which could be construed as a withdrawal of services. 2. The respondent claimed that the amenity of the location of the Park had been improved by the opening of a Coles Shopping Centre seven minutes away in 2008 and Lake Munmorah Shopping Centre directly opposite the northern end of the Park in July 2013. Additionally an exit road had been constructed by the respondent to provide a safer and more convenient way to access the local shops at a cost of $119,000.00. A further schedule was submitted listing various upgrades to the Park since 2008. These included additional barbeque pavilions, extra caravan storage, bar stools, flat screen and glasswasher for the clubhouse, upgraded foxtel package, Landcare workshop, security cameras and upgraded bowling green. The respondent conceded that the sauna had not been replaced. This burnt down in a fire after it had been left on by a resident and was not replaced in consultation with the residents committee who opted for a new flat screen in the club house. The spa was also removed in consultation with the residents committee and additional facilities were added to the clubhouse. When this evidence was put directly the applicant and Mr Squires, they did not deny the improvements but claimed that they did not use many of the items and that some items such as the exit road had been planned when they moved in to the Park. Any work done to the premises by or on behalf of the resident, to which the park owner has consented 1. The parties did not produce any evidence in relation to this issue. Any other relevant matter 1. Under this factor the applicant again raised the submission that any further rent increase should be in line with CPI. Findings and Conclusion 1. The applicant bears the onus of establishing that the rent increase is excessive. Although the CPI is a factor that the Tribunal is to have regard to it is not determinative. There is nothing in the Act to prevent a rent increase above this amount. 2. The respondent has provided evidence that is essentially undisputed that all residents of the Park have agreed to be paying the same rent, with effect from March 2016, with the exception of the respondents. There is no evidence from either party that the applicant's site is of lesser value or less desirable than others in the Park. Nor that the applicant is restricted in any way from accessing the facilities of the Park. The figure fixed by the respondent as the rent across the Park, $169.70, was not at the higher end of the rents already charged for existing residents. It is less than that set for new residents of the Park and, on the evidence, comparable with neighbouring parks which do not have the same level of amenity or facility. On the evidence the Tribunal is satisfied that the proposed increase puts the applicant's rent in line with market rent. 3. The respondent has produced evidence of increased outgoings which have greatly exceeded CPI increases. The applicant did not dispute these outgoings. The respondent also provided evidence of improved facilities at the Park. Even if the applicant does not utilise the improved facilities at the Park, it does not necessarily flow that they have minimal benefit. 4. Having considered all the matters prescribed by section 57, on the evidence available the Tribunal is not satisfied that the rent increase is excessive and declines to make an order under section 55 of the Act. The application is therefore dismissed. P Hunter General Member Civil and Administrative Tribunal of New South Wales 2 April 2015 I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 June 2015