Silva Portfolios Pty Ltd trading as Ballina Waterfront Village & Tourist Park v Reckless

1. [1]

   By an amended summons filed 24 May 2018 the plaintiff seeks leave to appeal from part of a decision of the Appeal Panel of the NSW Civil and Administrative Tribunal made on 3 April 2018: Reckless v Silva Portfolios Pty Ltd t/as Ballina Waterfront Village & Tourist Park [2018] NSWCATAP 80. The appeal concerns the Appeal Panel’s holding with respect to ground 5 of the appeal brought to the Appeal Panel by the present defendant.

2. [2]

   Although the appeal expressly only refers to ground 5, the issues determined by the Appeal Panel concerned both grounds 4 and 5. Those grounds were these:

Background

1. [3]

   The defendant is a resident in a residential park, being a caravan park, owned by the plaintiff at Ballina. In her application to the Tribunal, the defendant had asked the Tribunal to confirm that she was not liable to pay certain electricity charges to the Park Operator, and that she was entitled to a refund of amounts she had already paid. Her application was unsuccessful, with the Tribunal deciding that those charges and also some sewerage charges were validly imposed on her by the Park Operator, such that no refund was payable.

2. [4]

   In April 2014 the plaintiff and the defendant entered into an agreement called a Site Agreement under which the defendant was entitled to occupy an identified site in the plaintiff’s residential park. At that time residential parks were regulated by the Residential Parks Act 1998 (NSW) (the Old Act).

3. [5]

   The Site Agreement specified who was to pay for a range of rates, taxes and other charges. Amongst the charges the defendant agreed to pay was:

4. [6]

   Clause 6 of the Site Agreement provided:

5. [7]

   In her application to the Tribunal the defendant claimed for a reimbursement of electricity charges on the basis that the charges the Park Operator was imposing on her were higher than the amounts charged to the Park Operator by the electricity provider in contravention of s 77(3) of the RLLC Act.

6. [8]

   The Tribunal held that the electricity charges were valid under the old Act and continued to be valid under clause 6 of the Site Agreement and the transitional provisions of the RLLC Act. The Tribunal held they did not fall foul of s 77 of the RLLC Act because they continued to comply with clause 6 of the Site Agreement, and the Old Act and regulations.

7. [9]

   The Appeal Panel upheld the defendant’s appeal on grounds 4 and 5 and remitted the matter to the Consumer and Commercial Division of the Tribunal for the amount of the repayment to be calculated, with leave to the parties to adduce evidence about that matter. In doing so, the Appeal Panel overturned that part of the Tribunal’s decision that the charges made by the plaintiff did not fall foul of s 77(3) because they were in accordance with the Site Agreement and the Old Act and regulations. The plaintiff does not challenge that determination of the Appeal Panel.

8. [10]

   So that the judgment of the Appeal Panel can be understood it is necessary to set out some legislative provisions.

Legislative provisions

1. [11]

   Section 6 of the RLLC Act provides:

2. [12]

   Schedule 2 to the RLLC Act dealt with Savings and Transitional provisions. Schedule 2 relevantly provided:

The Appeal Panel’s decision

1. [13]

   Since the submissions of the plaintiff before the Appeal Panel and in the present proceedings rely on the history of the changes to the electricity market in recent years, it is necessary to set out briefly that history. It is conveniently summarised in the judgment of the Appeal Panel as follows:

2. [14]

   The Appeal Panel then noted a submission by the plaintiff as follows:

3. [15]

   The Appeal Panel dealt with that submission as follows:

4. [16]

   The plaintiff submitted to the Appeal Panel that a Facts Sheet published by NSW Fair Trading lent support for the plaintiff’s construction of s 77. The Appeal Panel at [63] held that the commentary in the Facts Sheet diverged from the terms of s 77(3). The Panel held that the Facts Sheet was consistent with condition 7 in Version 4 of the Australian Energy Regulator’s Retail Exempt Selling Guideline, but held that compliance by an exempt person with condition 7 did not necessarily equal compliance with the requirements of s 77(3). In that regard, the Appeal Panel said:

5. [17]

   Finally, the plaintiff drew attention to what was said in clause 3 of Schedule 2 to the RLLC Act. Its submission in reliance on that clause was set out in the Appeal Panel’s judgment as follows:

6. [18]

   The Appeal Panel’s conclusion in relation to that submission was as follows:

Grounds of appeal

1. [19]

   The plaintiff appeals on one ground only as follows:

2. [20]

   The plaintiff set out five reasons why leave should be given as follows:

Determination

1. [21]

   The defendant accepted that the issue raised by the appeal was of sufficient importance that leave should be granted to the plaintiff to appeal. Having regard to the principles in Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56 at [22] and Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46], I agree that leave should be granted. There is an important point of principle derived from the proper construction of s 77 of the RLLC Act. The issue is one which will certainly affect residents in the residential park owned by the plaintiff. Further, other owners and residents need to know what the limits are under s 77 on the rights of the owners to charge for electricity.

2. [22]

   The difficulty in this case arises from the timing of the enactment of various pieces of legislation and, arguably, from the use of regulation to bring about a change in the way one Act, the National Energy Retail Law (Adoption) Act 2012 (NSW) (the NERL Adoption Act), operated without regard to other legislation, being the RLLC Act. The position developed in this way.

3. [23]

   The NERL Adoption Act was an Act which adopted the Schedule to the National Energy Retail Law (South Australia) Act 2011 (SA) by virtue of s 4 of the NERL Adoption Act. The NERL Adoption Act was assented to on 21 June 2012 and commenced on 1 July 2013. However, s 4(a) of the NERL Adoption Act said that the South Australian law applied with the modifications set out in Schedule 1 to the NERL Adoption Act. That Schedule inserted a number of definitions and sections of the Act which dealt with the particular regime to be put in place in NSW during a transitional period. The definitions were:

4. [24]

   On 20 November 2013 the RLLC Act was assented to. However, it did not commence to operate until 1 November 2015. Section 77(3) of that Act made reference to a “regulated offer retailer” in relation to a utility in respect of which s 77 was concerned.

5. [25]

   Section 12 of the NERL Adoption Act relevantly provided:

6. [26]

   Pursuant to the power in s 12 of the NERL Adoption Act, the Governor made the National Energy Retail Law (Adoption) Regulation 2013 (NSW) (the 2013 Regulation) which commenced on 1 July 2013. Clause 5 nominated local area retailers for both gas and electricity. Sub-clause (2) nominated Origin Energy Electricity Ltd as a local area retailer for premises in NSW connected to the distribution systems of Essential Energy and Endeavour Energy. Clause 6 nominated regulated offer retailers for gas and electricity. Sub-clause (2) provided:

7. [27]

   On 27 June 2014 the Governor made a further Regulation called the National Energy Retail Law (Adoption) Amendment (Retail Price Deregulation) Regulation 2014 (NSW) (the 2014 Regulation) which commenced on 1 July 2014.

8. [28]

   The explanatory note relevantly said this:

9. [29]

   Clause 3 of Schedule 2 omitted cl 6(2) of the 2013 Regulation. That is, it abolished regulated offer retailers for electricity.

10. [30]

    Clause 5 then inserted Div 7 into Pt 6 of the 2013 Regulation. It relevantly provided:

11. [31]

    By the omission of cl 6(2) and the provisions of clauses 50 and 52 of the 2014 Regulation, there ceased to be any entity known as a regulated offer retailer from 1 July 2014 when the 2014 Regulation commenced. However, no amendment was made to s 77(3) of the RLLC Act, which at the time of the amendments to the National Energy Regulations had not commenced to operate.

12. [32]

    When the RLLC Act commenced to operate on 1 November 2015 the restriction on the operator, here the plaintiff, in s 77(3) was not to charge the home owner (here the defendant) an amount for the use of electricity that was more than the amount charged by the utility service provider (accepted as being Origin Energy) or the regulated offer retailer who is providing the service for the quantity of the electricity supplied.

13. [33]

    The essence of the plaintiff’s argument is that the Appeal Panel erred by not giving any meaning to the words “regulated offer retailer” when principles of construction require that all the words in a statute must be given meaning. The plaintiff submits, therefore, that the “regulated offer retailer” is now to be read as the entity that provides a standing offer to a small customer for whom it is the designated retailer: National Energy Retail Law (NSW) s 22. The plaintiff submits that this means that, provided the operator does not charge the home owner more than is contained in the standing offer, s 77(3) is not breached. In that way, the entity that was the regulated offer retailer is being referred to together with all that is now involved in that entity being a designated retailer.

14. [34]

    This plays out in a practical sense in this way. The standing offer rate from 1 July 2016 from Origin Energy, as the designated retailer, as far as the plaintiff is concerned, is 26.620, 26.191 and 25.773 cents per kWh (see Court Book (CB) 293). The rate actually charged to the plaintiff by reason of the plaintiff having a smart meter that breaks down the charges into Peak, Shoulder and Off-peak rates is shown at CB 270. Those rates there are respectively 6.2377, 6.2372 and 4.2102 cents per kWh. Nevertheless, the plaintiff says it is entitled to charge the standing offer rate because s 77(3) only prevents it charging more than either the utility service provider or the regulated offer retailer charge. It is accepted by the parties that the regulated offer retailer is now the designated retailer.

15. [35]

    The plaintiff eschewed any reliance on the argument based on the word “circumstance” in clause 3 of Schedule 2 of the RLLC Act dealt with in the Appeal Panel’s judgment at [70]-[72] and set out above at [17]-[18].

16. [36]

    The defendant submits that the words “regulated offer retailer” should simply be read as descriptive of the entity that is now a designated retailer, without importing the new arrangements of a standing offer that a designated retailer is obliged to make.

17. [37]

    In my opinion the decision of the Appeal Panel was correct, although my reasons for reaching that conclusion differ to some extent from those of the Appeal Panel.

18. [38]

    In the first place, I accept the principle of construction set out in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 where the joint judgment of McHugh, Gummow, Kirby and Hayne JJ said at [71]:

19. [39]

    Notwithstanding that I am firmly of the opinion that the Legislature overlooked the fact that the RLLC Act, which had been passed and assented to in 2013, was not amended to take account of the changes made by the 2014 Regulation before the RLLC Act was proclaimed to commence, it is necessary to strive to give a meaning to the words “regulated offer retailer” although such an entity ceased to exist before the RLLC Act commenced.

20. [40]

    Clause 52 inserted into the 2013 Regulation by the 2014 Regulation makes clear that a reference to a regulated offer retailer in any Act is taken to be a reference to a person who was a regulated offer retailer immediately before 1 July 2014. Further, the effect of clause 50 of the 2013 Regulation is, as both parties accept, to rename a regulated offer retailer as a designated retailer. Accordingly, the words “regulated offer retailer” in s 77(3) should be read as the designated retailer.

21. [41]

    However, that does not resolve the dispute between the parties. As noted, the plaintiff asserts that, if the words are to be read as if they read “the designated retailer”, that must carry with it the standing offer regime that cl 50 speaks of. I do not think that is correct in the circumstances of this case. I accept the defendant’s submission that to import the standing offer regime would be to import a hypothetical into the true position in relation to the charging for electricity by Origin Energy, which happens to be both the utility service provider and the designated retailer.

22. [42]

    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. That is supported by the words “is more than the amount charged” in s 77(3). The words do not say “that is more than the amount that could be charged”. The evidence in the present case demonstrates that the operator is being charged by Origin Energy, not at the standing offer rate, but at the rate which is evidenced from the account from Origin Energy to the operator at pages 270 and 271 of the Court Book. Those charges are not charged at the rate of the standing offer that might have been charged.

23. [43]

    Support for this construction comes also from the prescribed standard form of residential site agreement effected by cl 6 of the Residential (Land Lease) Communities Regulation 2015 (NSW). Clauses 8, 9 and 10 of the standard form agreement deal with payment for utilities where the operator is the re-supplier of the utility to the residential site. In particular, cl 10 provides:

24. [44]

    In the first place, cl 10.1 limits the amount that the operator may charge for the use of a utility to what the relevant utility service provider has charged the operator. Then, and by comparison, the service availability charge is posited on a hypothetical, namely, a charge that would be charged if the service was supplied directly to the resident by the utility service provider.

25. [45]

    Clause 10.1 of the new standard agreement is not consistent with a reading of s 77(3) that incorporates a hypothetical charge that could have been made but was not made by the designated retailer. In saying that, I accept that the present defendant’s site agreement is an agreement that was made prior to the enactment of the RLLC Act, and continues on its own conditions, subject to s 6(1) of the RLLC Act and, accordingly, s 77(3).

26. [46]

    The significance of the word “charged” in s 77(3) as referring to the actual, as opposed to the hypothetical, position is also highlighted by the wording of s 78(1) of the RLLC Act dealing with unpaid utility charges. That sub-section provides:

27. [47]

    In a similar manner to cl 10.2 of the new standard form residential agreement, the charge being spoken of in s 78(1) is a hypothetical charge and not one that was actually imposed by the utility service provider or the designated retailer.

28. [48]

    A further situation in which the words “regulated offer retailer” might have the meaning for which the plaintiff contends, is one where the arrangement between the designated retailer and the operator is based on the standard offer regime. If, as the plaintiff submits, “regulated offer retailer” in s 77(3) is to be understood as the designated retailer providing post-deregulation standing offer services, then the operator in that situation would be free to pass onto the resident the standing offer charges that the operator is required to pay with respect to that resident’s use of electricity.

29. [49]

    The plaintiff submitted that, as it happened, Origin Energy was not only the utility service provider wearing its market hat, but was also the designated retailer wearing its standing offer hat. However, it is still necessary to determine in which guise it has “charged” the operator “for the quantity of the service supplied to, or used at, the residential site”. Furthermore, in this case, the designated retailer is not the entity as such “who is providing the service”. Rather, that entity is the utility service provider. The fact that Origin Energy could have provided the service in either guise does not obscure the need to identify who is providing the service and on which basis.

30. [50]

    In Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 the Court said at [39]:

31. [51]

    There is much force in the defendant’s submission that the plaintiff’s construction of s 77(3) would import into the sub-section after the word “provider” the words “or in the case of electricity or gas would have been payable if the electricity or gas had been supplied to a small customer under a standard retail contract of the designated retailer at standing offer prices”.

32. [52]

    Had the Legislature intended to provide for that position it could have done so in a similar manner to what was done in s 78(1), cl 10.2 of the new standard form residential agreement, or regulation 13(1) of the Residential (Land Lease) Communities Regulation 2015 which provides:

33. [53]

    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 or use of the electricity consumed by the defendant.

Conclusion

1. [54]

   I make the following orders:

   1. (1)

      Leave to appeal from the decision of the Appeal Panel of the Civil and Administrative Tribunal given on 3 April 2018.

   2. (2)

      Dismiss the appeal.

   3. (3)

      Dismiss the Amended Summons.

   4. (4)

      The plaintiff is to pay the defendant’s costs.