The land lease community has greater certainty about “fixed calculation” site fee increases in New South Wales as a result of the October case of Rowe v Kincumber Nautical Village Pty Ltd [2022] NSWSC 1378.
In this case, Justice Garling found in favour of the Park Owners. 52 site agreements at the Kincumber Nautical Village provide for a ‘fixed increase’ based on the total of:
i. Any positive increase in CPI;
ii. 75%;
iii. A proportionate increase in certain operational costs; and
iv. The amount required to round up to the nearest dollar.
Home owners (via the Tenants Union of NSW) argued that the site rent increase was invalid because:
- The methods (and particularly the method at item iii) was subjective in nature and not fixed – but the Court rejected this on the basis that there was no scope for the Park Owner to exercise any discretion;
- A fixed calculation should be limited by the example provided in the section (ie variations in CPI or the pension) and also the terms of the standard site agreement – but the Court rejected this on the basis of a plain interpretation of the legislation which stated that the CPI and the pension were simply examples and that there is noted that the standard site agreement was contained in the regulations, which is not determinative in interpreting legislation.
A further argument was raised that to the effect that the site rent review was actually a number of fixed calculations rather than a single method as required by the Act. The Court did not agree with this and Counsel actually conceded the argument during oral arguments.
The Court ultimately held that the site rent increase described in the site agreements is ‘one method’ and is a ‘fixed calculation’ that is otherwise in accordance with the legislation.
DSL Law assists operators of Land Lease Communities throughout Australia. If you want to know how this case may affect you, please get in touch.
