David vs Goliath

By Bob Morris, Kincumber Nautical Village

Bob Morris is a land lease community home owner and resident committee member. He also became an advocate for other home owners in his community when they decided to challenge the legality of the fixed method site fee increase that is a term of their site agreements. Bob wrote this article to share his experience and to highlight some of the difficulties facing home owners when they want to assert or protect their legal rights.

The balance of power in land lease communities rests squarely in the hands of the operator. The introduction of the Residential (Land Lease) Communities Act (RLLC Act) in 2015 strengthened their ability to dictate the terms which affect the residents. This was clearly demonstrated after the NSW Civil and Administrative Tribunal (NCAT) handed down its decision in favour of the 51 residents who challenged the legality of the multiple fixed method site fee increase being used by Kincumber Nautical Village (KNV). This series of calculations was producing increases of between $13 and $18 per week in 2018, with a compounding formula which meant site fees would double from $300 per week to $600 per week over 9 years for those at the top of the scale.

The decision was handed down by Senior Member Ross on 3 September 2020. On 16 September 2020 we (the applicants) were informed an Appeal had been lodged by the operator. On 1 October, the 51 residents involved in the case received a letter from the operator stating he was seeking leave to have the Appeal questions of law referred to and heard by the Supreme Court of NSW. For a group of pensioners, this was a daunting prospect, with the possibility of considerable costs involved. This is part of the power game from those with the resources to hire the best lawyers and where legal fees can be written off against taxes. Residents were asked to “clarify how they would be represented” and were asked to inform the operator if they “do not wish to participate in the appeal at all.” Despite initial fear, the 51 remained solid and decided to stay in the fight and to oppose the referral to the Supreme Court of NSW.

The decision on the referral was made by the Appeal Panel constituted by Deputy President S Westgarth, after written submissions were filed by both sides. On 10 December 2020 this decision was published on NSW Caselaw website, where the Appeal Panel refused the request for referral and set in train the processes in which the Appeal was finally heard by the Tribunal Appeal Panel on 25 March 2021. A significant consideration in the judgement was a letter sent on 4 November 2020 to all home owners on the fixed method informing them of an increase in site fees from 27 January 2021. This was in contempt of the existing Tribunal orders, and at a subsequent directions hearing, an order prohibiting any increase until after the Appeal is determined was put in place.

The Appeal Panel at the Appeal hearing consisted of Senior Members Kay Ransome and David Robertson SC. The operator was represented by a barrister, Adam Hochroth, instructed by Corrs Chambers Westgarth Lawyers, while I represented the respondents to the Appeal.

As a retired teacher, it was a huge learning curve for me, and it was most certainly a David versus Goliath scenario. However, with the support of Julie Lee and Paul Smyth from the Tenants’ Union, I felt confident in presenting the case on our behalf. The Tribunal is less formal and more flexible, and with thorough preparation, I am very hopeful the Appeal will be dismissed.

The defence of the multiple fixed methods used, evolved from a “formula” to a “series of calculations” to finally “3 separate fixed methods” which added together to become “one fixed method” despite the Act saying only one method could be used. To me that defied all logic and I did point out that when 4, 9 and 16, all of which are perfect square numbers are added together, the result is 29 which is not a perfect square!

The Act offers an operator four options when using the fixed method, with only one to be chosen. There is a fifth provision of “other” if none of the four are selected. Our agreement involved crossing out the first four, selecting “other” but then going back and choosing two of the four and adding another to make three fixed methods. I used an analogy involving my 4-year-old granddaughter to demonstrate the absurdity of this position. As a treat, I would offer her a list with instructions to select one only. On the list there might be an ice cream, a chocolate bar, a meringue, a cream bun or other (specify). Using their example, she could reject the first four, select “other” and then proceed to include all the first four treats. This was the “logic” of the appellant’s argument and seemed well at odds with the intent of the Act.

The decision has been reserved and as this is a landmark case, it may be a while before it is published. The lesson to be taken from this case is that individuals can stand up for their rights and be proactive in their endeavours.

On 11 November 2020 the local Liberal Member for Terrigal, Adam Crouch and the Labor Member for Gosford, Liesl Tesch, both spoke in Parliament supporting our case. Hopefully that bipartisan support will translate into significant changes to the Act which is currently under review. Now is the time for residents to regain certainty, fairness and equity in land lease communities.

This article was published in Outasite magazine issue 7. Outasite is published annually. Outasite Lite email newsletter, is sent several times a year – subscribe here. All past issues are available in the archive.