Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Stewart v Raythel Holdings Pty Ltd t/as Colonial Tweed Holiday Home Park [2019] NSWCATCD 48 Hearing dates: 27 March 2019 Date of orders: 02 May 2019 Decision date: 02 May 2019 Jurisdiction: Consumer and Commercial Division Before: W Priestley, General Member Decision: 1. The applications were commenced within time. 2. The respondent is not entitled to charge the applicants an amount that is more than the amount charged by its electricity provider who is providing the electricity service for the quantity of the service supplied to or used at the applicants' residential sites. 3. The respondent cannot impose a Service Availability Charge on the respondents in respect to the supply to, or usage of electricity at, the applicants' residential sites, where such a charge results in the applicants being charged an amount which is more than the amount charged by the respondent's service provider for the quantity of electricity supplied to or used at the applicants' residential sites. 4.1 The parties are directed to attempt agreement as to the amount of money due to each applicant for the period 3 April 2018 to 30 April 2019. 4.2 Should agreement be reached by 17 May 2019, the parties are to lodge with the Registry a schedule setting out the agreed amounts on or before 24 May 2019. 4.3 Should no agreement be reached by 17 May 2019, the applicants are to lodge a schedule of their calculations with the Registry by 24 May 2019, and the respondents are to lodge a schedule of their calculations by 31 May 2019. Legislation Cited: Civil and Administrative Tribunal Act section 41 Civil and Administrative Tribunal Rules Rule 23 (3) Limitation Act 1969 NSW - section 14 Residential Land Lease Communities Regulation NSW schedule 3 Residential (Land Lease) Communities Act NSW sections 77, 85, 156 and 157 Cases Cited: Palmer v Blue Circle Southern Cement Pty Ltd [1999] NSWSC 697 Reckless and Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park (No. 2) [2018] NSWCATCD 59 Reckless v Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park [2017] NSWCATCD 57 Reckless v Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park [2018] NSWCATAP 80 (3 April 2018) Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park v Reckless [2018] NSWSC 1343 David Holdings Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 Category: Principal judgment Parties: George William Stewart & 25 others (Applicants) Raythel Holdings Pty Ltd t/as Colonial Tweed Holiday Home Park (Respondent) Representation: Mr Bennett (ARPA) (Applicant) Mr Gates (Director) (Respondent) File Number(s): RC 18/50388 and others Publication restriction: Nil Reasons for Decision The applications 1. Mr Stewart's application was lodged on 21 November 2018. 2. In addition to Mr Stewart, there are a further 30 applicants who have residential site agreements with the respondent. The last of the applications was lodged on 17 December 2019. All seek reimbursement of electricity charges imposed by the respondent which are in excess of the amounts the respondent is entitled to charge as proscribed in section 77 (3) of the Residential (Land Lease) Communities Act ("the Act"), on the basis those charges were paid under a mistake of fact or law. 3. There were another two applicants, but as they had residential tenancy agreements, not site agreements, with the respondent, their applications were dismissed because the Tribunal had no jurisdiction to hear them under the Act. Background 1. The respondent agrees the applicants have been overcharged for electricity. However, the parties do not agree on the amount that have been overcharged, because of two unresolved issues. The first issue is whether the Tribunal should extend the period of time for the lodgement of the applications, and if so, to what date, and from what date should recovery be allowed. 2. The second issue is whether the respondent can charge the applicants a "Service Availability Charge" (SAC), where the total of such charge combined with the charge for the supply of electricity to the applicants' residential sites, exceeds the amount the respondent has been charged by its electricity supplier for the quantity supplied to or used at the applicants' residential sites. 3. The hearing of the applications was adjourned part-heard so these issues could be decided, and the parties could then have the basis to calculate what is owed to each applicant. 4. It is necessary to set out the history of the litigation surrounding section 77 of the Act. 5. On 1 November 2015 the Act commenced. Section 77 of the Act changed the way operators could charge home owners for electricity. 6. On 24 February 2017, an application for reimbursement of overpaid electricity charges was lodged by a Mrs Reckless (Reckless v Silva Portfolios Pty Ltd [2017] NSWCATCD 57). That application was dismissed by the Tribunal on 3 August 2017. 7. Mrs Reckless appealed that decision successfully to the Tribunal's Appeal Panel. On 3 April 2018 the Appeal Panel found Mrs Reckless had been charged in excess of what was permitted in section 77, upheld the appeal, and re-mitted the matter to the Tribunal's Consumer and Commercial Division for determination of the amount that Mrs Reckless should be refunded (Reckless v Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park NSWCATAP [2018] 80). 8. The Appeal Panel's decision was appealed to the Supreme Court by the operator, and a stay placed on the Appeal Panel's orders. On 9 September 2018 the Supreme Court dismissed the appeal, and the stay on the Appeal Panel's orders was lifted. 9. On 9 January 2019, Mrs Reckless' application was finally determined by the Tribunal, and orders made to reimburse her monies she had been overcharged in contravention of section 77 (3) (Reckless v Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park [2018] NSWCATCD 59). The hearing and the evidence 1. At the hearing of these applications on 27 March 2019, the Tribunal considered all of the documents the parties had lodged, and also admitted supplementary oral evidence. The respondent does not dispute it has charged the applicants more than is permissible under section 77 (3), since the Act commenced on 1 November 2015. It says it has complied with section 77 (3) from 1 February 2019, when it altered its billing practices to comply with the Supreme Court's decision in Silva. Although not much turns on it because precisely what is owed will be determined shortly, I am unable to conclude that is the case on the evidence. 2. Although the respondent's calculations show the Service Availability Charge ("SAC") has been taken into account in determining the total it has charged the applicants for electricity, it seems the respondent is claiming it is entitled to charge the SAC, in addition to on-charging to the home owners the cost it has been charged for electricity by its providers (paragraph 9 at page 5 of the respondent's documents and oral submissions). For the sake of clarity, that issue is addressed as well. The respondent says the amounts it charges the applicants for electricity is only the cost to have the electricity provider supply the electricity to its meter. The respondent then argues the cost to provide the electricity from its meter, to the meters at the applicants' homes, being mainly recovery of the capital cost of the embedded network and the maintenance of it, is recoverable through the imposition of the Service Availability Charge, and this is provided for in section 77 (4) and (5). 3. The reason given by the applicants for the delay in lodging their applications, is that they only became aware of the possibility they were being overcharged for electricity was about the time Mrs Reckless lodged her initial application in February 2017. When that application was dismissed, they thought they were being charged correctly, and it was not until the Supreme Court decision, which was published on 9 September 2018, that they became aware of the true position. 4. In its written submissions (pages 10 and 11), and through Mr Gates at the hearing, the respondent provided evidence it has significantly altered its position by receiving and using the amounts overcharged to the applicants. Much of the overcharged amounts have been used to improve the community, such as replacing the water reticulation system in 2017. In oral evidence, Mr Gates said that a full refund would amount to approximately $50,000. That estimate was not challenged by the applicants and is accepted. 5. No details of the cost to replace the water reticulation system were provided, however given the community has about 85 residential sites, I infer that was significant. I also infer the respondent would not have upgraded the reticulation system in 2017, at all, or all at once, if it had known it would be required to repay all of the amounts it has been overpaid by the applicants. 6. Site fee increases for the next calendar year have recently been agreed with the home owners, and about one third of the site agreements at the community are by way of fixed method (as opposed to increases by notice) which does not allow increases in costs, above CPI or Aged Pension increases, to be factored into increases in site fees. Repayment of all overpaid amounts would impose a significant financial burden. The relevant legislation 1. Section 77 of the Act says: 77 Utility charges payable to operator by home owner (1) This section applies if, under a site agreement, the home owner is required to pay utility charges to the operator for the use by the home owner of a utility at the residential site. (2) The home owner cannot be required to pay for the use unless: (a) the use is separately measured or metered, and (b) the operator gives the home owner an itemised account and allows at least 21 days for the payment to be made. (3) The operator must not charge the home owner an amount for the use of a utility that is more than the amount charged by the utility service provider or regulated offer retailer who is providing the service for the quantity of the service supplied to, or used at, the residential site. Maximum penalty: 20 penalty units. (4) The regulations may: (a) provide for a maximum utility charge payable by home owners to the operator, and (b) create an offence for an operator to request or receive more than that maximum charge (if any). (5) The regulations may provide that a service availability charge for electricity payable by home owners to the operator of a community is to be discounted in accordance with the regulations where less than 60 amps are being supplied. Section 85 of the Act says: 85 Recovery of amounts paid under a mistake of law or fact (1) A home owner is entitled to recover an amount paid under this Part to the operator under a mistake of law or fact. (2) A home owner may, with the consent of the operator of the community, recover an amount mistakenly paid to the operator under this Part by deducting it from site fees payable by the home owner under the site agreement. (3) The Tribunal may, on application by a home owner or operator, make an order resolving a dispute concerning the operation of this section in the circumstances of a particular case. 1. Section 156(1) of the Act says a home owner, a former home owner or operator of a community may apply to the Tribunal for determination of: 156(1) … (a) a dispute relating to a right or obligation under this Act, (b) a dispute arising from, or relating to, a site agreement or collateral agreement, (c) any other matter that may be determined by the Tribunal under this Act. 1. Section 156(2) says an application must be made within the period (if any) specified in the Act or as prescribed in the regulations. No period is specified in the Act. Regulation 16 of the Residential (Land Leases) Communities Regulation 2015 (NSW) (RLLC Reg) says: 16 Applications to Tribunal For the purposes of section 156 (2) of the Act, an application to the Tribunal under a provision referred to in Column 1 of Schedule 3 must be made within the period specified opposite in Column 2. The schedule does not specify any period within which an application must be made under either section 77(3) or 85 of the Act. Consequently Rule 23 (3) of the NCAT Rules applies. That Rule says; Unless the Tribunal grants an extension under section 41 of the Act, an application must be made: (a) in the case where enabling legislation specifies the period within which the application is to be made—within the period specified, or (b) in any other case—within 28 days from the day on which the applicant became entitled under the enabling legislation to make the application 1. Section 157(1) of the RLLC Act sets out the orders the Tribunal can make on an application by a party to a dispute or other matter before the Tribunal. This includes an order for the payment of money, (section 157(1)(d)). Consideration Extension of time 1. Although section 77 has operated since 1 November 2015, and the applicants have been overcharged since then, they only seek to recover what they have been overcharged since February 2017 (tab C of applicants' folder), which is the time they became aware they might have been overcharged, being the time Mrs Reckless lodged her application in the Tribunal. I cannot understand the logic of that position, but it is the date the applicants have sought to recover from. 2. The respondent's position is that only amounts overcharged in the 28 days before the date the application was lodged, along with amounts overcharged since that date, should be ordered to be repaid, due to the prejudice they will suffer because they have changed their position after receiving the payments. The respondent submits the 28 day time limit in Rule 23 (3) started to run from the date on which the applicants became entitled to make their applications, and that entitlement arose when the mistaken payments were made. 3. The first question that must be resolved is from when the 28 day time limit starts to run. The respondent is correct in submitting that each monthly payment of an amount in excess of what section 77 (3) permits, imposed on the applicants by the respondent for electricity since 1 November 2015, is an amount paid under a mistake of law. Each mistaken payment gave rise to an entitlement to make an application under section 85 or section 156 of the enabling legislation (the Act), to recover the amount overpaid. 4. However that submission does not take proper account of the references to "dispute" in sections 85 (3) and 156 (1) of the Act. The better view is time started to run when the applicants were in "dispute" with the respondent about the mistaken payments. It follows the applicants do not need an extension of time, as the only evidence about when the dispute arose is the actual lodging of the initial applications on 21 November 2018, and the last application on 17 December 2018. Therefore the applicants can seek to recover all overpayments since 1 November 2015. In saying that, I have taken into account the respondent's evidence that a television station recorded a program at the community in which criticism was made of the respondent for overcharging electricity costs to home owners. However I am unable to infer from that which, if any, applicants made such criticism and by doing so could be said to be in "dispute" with the respondent. 5. In coming to this conclusion, I have considered the various time limits set out in the Act for the lodgement of applications in the Tribunal, and particularly those sections which provide a right to make an application in respect of a "dispute". For example, section 38 (1) says that an operator must not unreasonably restrict or interfere with a home owner's quiet enjoyment of their residential site and the common areas of the community. Section 38 (2) gives the Tribunal, on application by a home owner, the power to make an order resolving a "dispute" about an operator's compliance with the section. Schedule 3 of the Regulations says the time limit for making such an application, is within 6 months of the date of the alleged non-compliance. 6. Section 47 imposes obligations on an operator about mail services. Section 47 (3) gives the Tribunal, on the making of an application by a home owner, the power to make an order resolving a "dispute" about an operator's compliance with the section. Schedule 3 says the time for making such an application is the period in which the site agreement is in force. The same applies in relation to section 48 (4) (which deals with the making of an order to resolve a dispute about maintenance of trees by an operator). 7. Other examples of time limits imposed by the Act and its Regulations (rather than Rule 23 of the Civil and Administrative Tribunal Act) on the making of applications for the Tribunal to make orders about "disputes", are found in sections 123 (4) (termination for repairs), and 140 (4) (compensation for relocation). 8. There are other important sections in the Act giving home owners or operators the right to make applications about "disputes", which, like section 85, do not have the time for making the application stipulated by the Act or Regulations. They include section 45 (disputes about sub-letting or assignment), section 95 (disputes about community rules), section 115 (disputes about sales of homes) and section 121 (disputes about termination notices). 9. If Parliament had intended to limit the time within which an application can be made to recover money paid under mistake to 28 days from the date the money was mistakenly paid, rather than from the date a dispute arose about the recovery of it, Parliament would have done so by specifying that in either the Act or Schedule 3 to the Regulations, as it has done in relation to sections 38 (2), 48 (4), 123 (4) and 140 (4). It seems Parliament intended for "disputes" which have no time limit specified by the Act or Regulations, to be made within 28 days of the dispute arising, and within the relevant provision of the Limitation Act, in this case 6 years. 10. As I have found the dispute only arose on lodgment of the applications, it follows all of them have been made within the 28 days prescribed by Rule 23 (3) (b), and no extension under section 41 of the Civil and Administrative Tribunal Act is required. Can the respondent impose a Service Availability Charge in addition to what is permitted by section 73 (3)? 1. It was made very clear in the decision of Davies J in Silva Portfolios Pty Ltd t/as Ballina Waterfront Village and Tourist Park v Reckless [2018] NSWSC 1343, that the respondent cannot. At paragraph 42 his honour said " In my opinion, s 77 (3) is intended to ensure that the operator may not pass onto the home owner a charge for electricity greater than that which the operator has effectively been charged in respect of that home owner." At paragraph 53 it was said "On the proper construction of s 77 (3) of the RLLC Act, the plaintiff is not entitled to charge the defendant any more than the plaintiff has been charged for the supply and use of the electricity consumed by the defendant" (emphasis added). 2. While the Act specifically allows an operator to charge a home owner an SAC and a charge for the actual electricity, as has been done in this case, the total charge for the electricity consumed by the home owner, cannot be more than what the operator has been charged. In this case the combination of the SAC and the on-charging of what the operator has been charged, clearly exceeds the amount permitted by section 77 (3), and the applicants are entitled to be refunded the excess. 3. In reaching this conclusion, regard has been had to the amendment to clause 13 of the Regulations made under the Act, which deals with the maximum SAC for electricity. That amendment commenced on 7 October 20016, and replaced the "regulated offer retailer" with "local area retailer", in line with National Energy legislation. However as subordinate legislation cannot over-ride the legislation under which it is made, clause 13 cannot over-ride the limitation in section 77 (3) on what the respondent can charge for the quantity of electricity supplied to or used at the applicants' residential sites. Change of position by the respondent 1. As mentioned in paragraphs 16 to 18, the respondent has substantially altered its position as a result of receiving the monies the applicants have mistakenly overpaid. Although raised in relation to the applicants' request for an extension of time, the evidence is relevant to how much, if any, of the overpaid amounts the applicants are entitled to recover. 2. The leading case on change of position as a defence to a claim for recovery of monies paid under mistake, is David Holdings Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353. At paragraph 385 the majority of the Court said "If we accept the principle that payments made under a mistake of law should be prima facie recoverable, in the same way as payments made under a mistake of fact, a defence of change of position is necessary to ensure that the enrichment of the recipient is prevented only in circumstances in which it would be unjust. This does not mean that the concept of unjust enrichment needs to shift the primary focus of its attention from the moment of enrichment. From the point of view of the person making the payment, what happens after he or she has mistakenly paid over the money is irrelevant, for it is at that moment the defendant is unjustly enriched. However the defence of change of position is relevant to the enrichment of the defendant precisely because its central element is that the defendant has acted to his or her detriment on the faith of the receipt." 3. Change of position may also operate as a partial rather than full defence, to an action for recovery of money paid under a mistake. As was stated by Lord Goff in Lipkin Gorman v Karpnale [1] and cited in David Securities at 456 and in Palmer v Blue Circle Southern Cement [2] "where an innocent defendant's position is so changed that he will suffer an injustice if called upon to repay or repay in full, the injustice of requiring him so to repay outweighs the injustice of denying the plaintiff restitution." (emphasis added) 4. To require the respondent to repay all of the monies the applicants have paid by mistake, when the respondent has accepted the money in good faith and spent a significant portion of it in 2017 and more afterwards, would create an injustice that outweighs the injustice of the applicants not being able to recover all of the mistaken payments. 5. However it would not be unjust to require the respondent to repay all mistaken payments since 3 April 2018, as that was when the Appeal Panel's decision in Silva was published, and the applicants' entitlement to recover was made clear. Even though that decision was appealed to the Supreme Court, the decision of the Appeal Panel would have alerted all prudent operators to at least make provision for the possibility the Appeal Panel's decision would be upheld in the Supreme Court, even if, as asserted by the respondent, advice from Fair Trading was still inconsistent with the Appeal Panel's decision. Orders 1. Accordingly there will be an order the respondent repay the applicants all monies paid in excess of that permitted under section 77 (3) of the Act from 3 April 2018 until the date of these orders. The correct method for calculating the refunds is stated in Reckless (No.2) being to determine the overall cost of the electricity to the respondent charged by its provider, divide that amount by the total kilowatts used, and apply that figure to the total kilowatts used by each of the applicants. Orders will also be made about the parties completing calculations to minimise the hearing time necessary for final orders to be made. ********** Endnotes 1. [1991] 2 AC 548 2. [1999] NSWSC 697 at paragraph 21 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: 26 July 2019