Getting back to site fee increases, the NSW Civil and Administrative Tribunal has recently heard and determined an interesting case where the operator issued two notices of increase, claiming the second notice cancelled the first.
The Residential (Land Lease) Communities Act (RLLC Act) does allow for such a situation at section 67(9):
A later notice may provide for a lesser increase than that specified in an earlier notice under this section. A later notice has effect instead of the earlier notice and takes effect from the date on which the earlier notice was to take effect.
However, in this case home owners challenged the first increase as being excessive and the second increase notice was for a higher amount. Here is how the case unfolded.
The operator issued a site fee increase notice on 30 September 2019 seeking an increase of $6.00 per week, effective from 5 December 2019. Mediation failed and home owners applied to the Tribunal. On 20 December the Tribunal made an interim order suspending the requirement to pay the increase.
On 4 January 2020 the operator advised home owners the notice of increase would be cancelled and home owners withdrew the Tribunal application on that basis.
However, on 30 January the operator issued new notices to home owners, this time seeking to increase site fees by $10.00 a week.
The home owners sought advice and received assistance from both the Tenants’ Union and Mid Coast Tenants Advice and Advocacy Service regarding a fresh application to the Tribunal challenging the validity of the second notice of increase.
The argument put to the Tribunal was that the 2019 notice had taken effect on 5 December and varied the site fees; the notice could not be withdrawn once it had taken effect; and, the RLLC Act allows for only one site fee increase in a 12 month period under the increase by notice method.
The Tribunal agreed and found that:
“Whilst the Park Operator purported to withdraw the 2019 Notice on 4 January 2019, it had taken effect on 5 December 2019. The site agreements, having been varied to increase the site fees, were again varied by removing the increase and returning the site fees to the pre increase amount.
Section 67 (8) permits the cancellation of a notice and says that the notice may be replaced by a notice seeking a lower amount. There is no power in the Act to replace a notice with a notice seeking a higher amount.
In any event, by the time the notice was purportedly cancelled, there was no longer a notice but rather a variation of the site agreement which had taken effect pursuant to s 67 (10).”
The notice was ruled invalid on the basis it sought to increase site fees in breach of section 67 (6) which prevents site fees being increased more than once in a 12 month period.
We think this was a well-reasoned and sound decision but the Tribunal covered all bases by going on to consider the actual increase.
The operator put forward figures regarding some increased costs but failed to provide any evidence to support those claims. The Tribunal found the operator had failed to establish an entitlement to the increase and disallowed any increase in excess of CPI. The Tribunal noted the increase would only be effective if the finding that the 2020 notice was invalid is appealed by the operator, and overturned on appeal by the Appeal Panel.