Alsford v Richard & Kathryn Emerson t/as Soth West Rocks Tourist Park (Residential Parks) [2008] NSWCTTT 1258 (22 September 2008)

CONSUMER, TRADER AND TENANCY TRIBUNAL
Residential Parks Division

APPLICATION NO:	
RP 07/59094	

APPLICANT:	
Keith and Patricia Alsford	

RESPONDENT:	
Richard & Kathryn Emerson t/as South West Rocks Tourist Park	

HEARING:	
6 March 2008 at South West Rocks Tourist Park	

APPEARANCE	
Mr Wakeling for the applicant, Mr Moore for the respondent	

LEGISLATION:	
Residential Parks Act 1998

ORDER

1.	The rent payable (pursuant to the subject residential site agreement) is to be $433.51 per calendar month commencing on 3 January 2008.

REASONS FOR DECISION

It was common ground that the park owner had given valid notice of an increase in rent from $96.00 to $102.50 per fortnight under its residential site agreement with the tenant.  The tenant sought orders as provided in s.55 of the Act to reduce the new rent payable to $97.45 per fortnight.  The tenant also sought a reduction in rent under s.56 of the Act, and ancillary orders,  for alleged breach of the residential site agreement by the park owner arising from construction work carried out over a lengthy period of time in the residential park and proximate to the subject residential site.

The Tribunal was conducted by the parties on a tour of inspection of the residential park including areas particularly relevant to the application.

The rent increase dispute

Evidence

Both parties, by their advocates, addressed each of the heads set out in s.57 of the Act as being matters to be considered in determining rent applications.  

That evidence is summarised as follows:

General market level of rents

The applicant tendered the range of rents at three residential parks in the region, and also tendered photographs in one of those parks in Port Macquarie, some eighty or so kilometres distant.  Those rents overall were in the main lower than the rents paid by the applicant prior to the present rent increase.

The park owner contended there are no comparable residential parks in the near vicinity, and even those parks evidenced by the applicant are of lower standard in terms of upkeep and general amenity.

The value of the premises

Evidence indicated that the park owners are head lessees of the premises. The applicant stated that park owner paid to its lessor a small rent per site.  Neither party gave evidence of running or other outgoings for the facility.

Frequency and amount of previous rent increases

It was agreed that the previous several rent increases had been at a rate greater than the general rate of inflation in Australia.  It was also common ground that the rent prior to the present increase had been set by consent of both parties after a process of negotiation.

A general price index

The applicant tendered a list made available by the Australian Bureau of Statistics (“the ABS”) indicating that the Consumer Price Index (“the CPI”) for Sydney had increased by 1.3% in the twelve months to the September quarter 2007.  The applicants also drew the Tribunal’s attention to subsection 58(2A) of the Act (relating to the Sydney CPI as a park owner’s no-dispute right of rent increase).

The respondent contended that if the CPI were relevant it should relate to the period between changes in the rent, namely December to December.  The respondent also contended that a more appropriate index to consider is the published Property Index, which over 2007 has increased 9.7%.  It was also submitted that the Australian Reserve Bank and the Department of Treasury had both in written statements assessed the “underlying rate or inflation” for Australia in early 2008 as 3.8%.

Findings

After considering all the evidence the Tribunal found on the balance of probabilities as follows:

1.	There is one residential park located in Port Macquarie which offers a means of comparison of rent.

2.	The photographs of that park tendered to the Tribunal indicated a generally lower standard of amenity as compared with the subject premises; its roads and kerbs (if any) are not finished or maintained to the evident superior standard of the subject premises, and the standard of upkeep and general appearance of tenants’ residences is lower. 

3.	The above comparison leads to a conclusion that if such comparison were to dominate the present decision, rents at the subject premises would be higher than at the Port Macquarie premises.

4.	The value of the residential premises has not changed since the last rent increase, and for the purposes of the present considerations is not relevant.

5.	The parties having agreed by their conduct that the rent as agreed in the circumstances at the time of the previous rent increase was fair, the Tribunal finds that any perceived unreasonableness in previous rent increases (if any) had been resolved at that time.  Accordingly the Tribunal finds it fair and reasonable to assess this application in the light of any changes since the last increase.

6.	The Tribunal is not bound in these circumstances to adopt the Sydney CPI as the measure of fairness (s.58(2A)) as the respondent had not sought that level of increase envisaged as the trigger to invoke that subsection.

7.	The Tribunal having considered which index if any is relevant in these particular circumstances of the case declines to adopt the 1.3% contended by the applicant; in any case, it applies to a period not contiguous with the period between actual rent increase dates.  The Tribunal also declines to adopt the Property Index as it includes elements (such as real estate commission rates) not in the opinion of the Tribunal relevant to the true costs of operating the park nor, in this case, of the holding costs or opportunity cost of the land itself.

8.	Rather, the Tribunal finds that the underlying rate of inflation best reflects the general cost and income movements in the period between rent increases applicable to both parties.

Conclusion

Taking all the above into consideration the Tribunal concludes as follows:

1.	Rent at the subject premises was prior to the present notification of rent increase, fairy based at a level as high as, or higher but nor lower than, rents at the Port Macquarie residential park presented in evidence.

2.	The appropriate, fair and equitable assessment of rent increase, given the agreed fairness of the previous rent level, and given the unchanged and high standard or the residential park, should reflect the true change over the relevant period – December 2007 to December 2008 – of cost of living on average in Australia, being the underlying level of inflation, that is, 3.8%.  In the opinion of the Tribunal this fairly reflects, as is evident on the face of the statistic, the most likely historical increase in costs to the park owner and capacity of the tenant to pay.

An order is thus made for an increase of that amount, 3.8%.

Orders accordingly.

Murray Sainsbury
Member 
Consumer, Trader and Tenancy Tribunal

22 September 2008