Keith Reginald Hamlin Brown and Austrust Limited v the Commonwealth Bank of Australia No. 4232 Judgment No. SCGRG 92/226 Number of Pages 15 Torrens System Retirement Villages

[1993] SASC 4232

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA DEBELLE J

CWDS
Torrens System - Priority - Statutory charge created under Retirement Villages Act - Charge to rank in priority over any other mortgage, charge or encumbrance - whether the charge ranks in priority over prior registered mortgage Retirement Villages Act 1987 5.9,15 and Real Property Act 1886s.6. South Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603 and Travinto Nominees Pty Ltd v Vlattas (1973) 129 CLR 1, applied.
Retirement villages - Residential unit - Hostel unit - Whether a bedroom is a hostel unit. Retirement Villages Act 1987ss.3, 6 and 9. Bull v Attorney General (NSW) (1913) l7 CLR 370 and Waugh v Hippen (1986) 64 ALR 195, applied.

HRNG ADELAIDE, 25, 26 January, 11 February 1993 #DATE 22:10:1993
Counsel for plaintiffs:     Mr A Besanko
Solicitors for plaintiffs:    Patel and Co
Counsel for defendant:        Mr N Morcombe QC
Solicitors for defendant:     Mr N P Andersen
Intervener:                 Ms P Cahill
Solicitors for intervener:    Crown Solicitor

ORDER
Decalarations made.

JUDGE1 DEBELLE J This is another of those unfortunate instances where one of two innocent parties must suffer in consequence of the fact that a third party has not acted according to law. 2. The plaintiffs seek to recover moneys which they say are repayable to them by the administrator of a retirement village. They further assert that, by virtue of the Retirement Villages Act, 1987, the moneys payable to them constitute a charge on the land on which the retirement village was erected, a charge which the Retirement Villages Act provides ranks in priority over a registered mortgage held by the defendant, the Commonwealth Bank of Australia ("the Bank"). There are important questions affecting the operation of the Retirement Villages Act and the Real Property Act. Pursuant to s.9(2) of the Crown Proceedings Act, 1992, the Attorney-General intervened for the purpose only of adducing argument on the questions of law. 3. The action concerns premises at Glenelg known as the Sunset Rest Home. On 4 February 1988 a Mrs Jeremic purchased land and premises at 5 South Esplanade, Glenelg. The premises had obviously at one time been a substantial residence comprising a ground floor, first floor and basement. At the time of purchase, the premises were being used as a nursing home known as the Glenelg Private Nursing Home. Mrs Jeremic also purchased the business of the nursing home. 4. Mrs Jeremic borrowed monies from the Bank to assist in the purchase of the land and premises. She executed a mortgage in favour of the Bank by which she charged the land at Glenelg with repayment of the moneys advanced to her. On 13 March 1988 the mortgage was registered under the Real Property Act, 1886 as a first mortgage. Mrs Jeremic continued to operate the premises as a nursing home until about mid-1989. She then decided to change the use of the premises and convert them to what she called a retirement village or rest home. On 30 June 1989 she sold the nursing home licence. She then carried out renovations to improve the interior of the premises. The renovations consisted of painting, re-carpeting, and some minor interior re-construction. Most of the renovations were carried out on the ground floor. Mrs Jeremic also made enquiries about retirement villages. She inspected some rest homes and retirement villages. She obtained documents which she said came from and were in standard use in rest homes and retirements villages. She consulted a solicitor and gave him the documents. He then prepared some sets of documents for her. They were:
    1. A Residence Contract,
    2. A notice to prospective residents,
    3. A schedule called a checklist, and
    4. A set of residence rules. 5. I interpolate that, although Mrs Jeremic asserts that the documents she gave her solicitor were in standard use in rest homes and retirement villages, that evidence is of no moment in determining the issues in this action. 6. Mrs Jeremic borrowed further sums from the Bank to finance the cost of these renovations. The Bank was informed of these works. It believed Mrs Jeremic intended to operate a rest home. No evidence was given on behalf of the Bank. What the Bank understood by a rest home is not known. 7. After the renovations had been completed, the premises was disposed as follows. The ground floor consisted of six main rooms of varying dimension. There were two large rooms at the front of the building, two large rooms at the rear and two smaller rooms on one side of the building. Each of these six rooms was proposed to be used as a bed-sitting room. On the ground floor, there were also three separate bathrooms (which were the only bathing facilities for the six bedrooms), a kitchen, a dining area and an office. Mrs Jeremic and her son lived on the first floor. The evidence is unclear as to whether part of the first floor was available for use by other occupants of the Sunset Rest Home. I find that it was not. There is no evidence concerning any proposed use for the basement. 8. On 30 November 1989 Mrs Jeremic appointed Kaye Jeffs Real Estate as her agent to find occupants for what were called units in Sunset Rest Home. She arranged for advertising of the premises as providing "Seafront luxury for the aged... A large home offering luxury accommodation for the aged." The premises were, with an excess of gentility, called "Sunset Rest Home". 9. The basis on which occupancy was to be provided was that the intending occupants would lend a sum of money to Mrs Jeremic, a proportion of which would be repaid upon the termination of the occupancy. The amount to be repaid was to be determined by reference to the length of the period of occupancy. In addition a quarterly, non-refundable payment was made. These rights were provided in a Residence Contract, the relevant terms of which I will shortly examine in more detail. The amount of the loan for the rooms varied. The occupancy was for the term of the life of the occupant. The amount of the loan for each of the two front rooms was $69,000, it was $59,000 for the two rooms at the rear and one other room, and $39,000 for the sixth room. 10. On 20 January 1990 Mrs E.V.M. Chambers contracted to occupy one of the units. On 25 January 1990 Mr K.R.H. Brown contracted to occupy another unit. Each completed a Residence Contract. The loan in each case was $69,000. The contracts were in almost identical terms. The contract executed by Mr Brown had annexed to it a form of acknowledgment which was not annexed to the contract executed by Mrs Chambers. Nothing turns on the terms of the acknowledgment. 11. Mrs Chambers and Mr Brown moved in to the premises in late January 1990 and each occupied one of the front rooms at Sunset Rest Home. Each room had a small refrigerator and tea-making facilities. Mrs Chambers and Mr Brown each provided their own furniture. Mrs Chambers died in July 1990. The second-named plaintiff is the executor of her estate. On 5 August 1990 Mr Brown left the premises because of ill health. 12. Mrs Chambers and Mr Brown were the only long term occupants of the Sunset Rest Home. For a period of four to five months, three other men occupied rooms on the ground floor. Each had been referred to Mrs Jeremic by Public Trustee. Each paid a weekly fee to occupy a room. One paid a deposit of $2,000 which was repaid when he left the premises. Each of these men was about 80 years old. They occupied their rooms for about four to five months. There was some suggestion that other persons had occupied some rooms for a brief period but the evidence was quite inconclusive. I find that these three men together with Mrs Chambers and Mr Brown were the only persons, other than Mrs Jeremic and her son, who occupied rooms at Sunset Rest Home. 13. Mrs Jeremic had a number of business interests. She got into financial difficulty. On 17 June 1991 she was declared bankrupt. Up to that time, she had not repaid that portion of the loan which was repayable to the estate of Mrs Chambers or to Mr Brown. By virtue of s.9(4) of the Act, if the Sunset Rest Home was a retirement village as defined in the Retirement Villages Act, the right of the estate of Mrs Chambers and of Mr Brown to repayment of part of the loans paid by them were in each case secured by a charge on the land owned by Mrs Jeremic. By virtue of s.9(4a) of the Act that charge ranked in priority to any other mortgage, charge or encumbrance over the land. In order to protect the charge the plaintiffs registered caveats over the land. 14. On about 22 November 1991 the Bank, as mortgagee in possession of the land, sold the land. The parties to this action had agreed that the proceeds should be paid into the Suitors Fund in this Court to enable settlement of the sale of the land to be effected. Settlement was effected on 24 January 1992. On 25 January 1992 the sum $150,000 was paid into the Suitors Fund to abide the outcome of this action. In this action the plaintiffs each seek a declaration that the charge to which they aver each is entitled ranks in priority over the Bank's registered first mortgage. They also seek a declaration that each is entitled to be paid out of the sum of $150,000 a sum sufficient to satisfy that charge. 15. Shortly stated, the main issues in this action are, first, whether the Sunset Rest Home was a retirement village as defined in the Retirement Villages Act and, second, if it is, whether the charge in favour of each of the plaintiffs ranks in priority to the registered first mortgage of the Bank. There are some subsidiary issues. Before dealing with the various issues, it is convenient to note the relevant provisions of the Residence Contracts. The parties to the contracts were, on the one hand, Mrs Jeremic who was described in the contract as "the Administrator" and on the other hand Mrs Chambers and Mr Brown respectively. Mrs Chambers and Mr Brown were described by the contract as "the Resident". The recitals to the contracts were in identical terms and provided:
"A. The Administrator is the owner of the land and building situate at 5 South Esplanade, Glenelg 5045 being the whole of the land comprised and described in Certificate of Title Register Book Volume 3894 Folio 105 (hereinafter called "the said Land").
B. There is erected and developed on the said Land residential units as shown to and inspected by the Resident (hereinafter called "the said Units") together with additional facilities ancillary thereto for use as a retirement village.
C. The Administrator is the administering authority in relation to the abovementioned retirement village.
D. Pursuant to the provisions of an interest free loan made contemporaneously herewith between the parties hereto the Resident has advanced to or to the credit or the Administrator a sum of money to be repaid as herein provided.
E. In consideration of the said Loan advance the Administrator has agreed to grant to the Resident a right of occupation of one of the Units upon the terms and conditions herein contained." 16. For present purposes, the relevant provisions of the contract are clauses 1 to 5 and 18. Clauses 1 to 5 provide:
    "1. Right of Occupation In consideration of the sum of
    money advanced by the Resident to the Administrator and in
    consideration of the premises, the Administrator hereby grants
    to the Resident:
    (a) The right to reside in the said Unit and
    (b) To use the fixtures fittings furniture appliances and other
    articles presently affixed to or situated in the said Unit and
    specified and described in Item 5 of the Schedule hereto;
    (c) The right to use in common with the Administrator, its
    servants agents and invitees and with other residents of the
    Sunset Rest Home and their respective servants agents and
    invitees the Common Area in the relevant village;
    for the term as provided herein as and from the Date of
    Commencement.
    2. Resident's loan
    (a) The Lender hereby lends to the Administrator the sum of
    money set out in item 3 of the Schedule hereto (hereinafter
    called "the said loan") forthwith upon the execution of this
    Agreement.
    (b) The said loan shall be for the term of the residency by the
    Resident free of interest and reduced as herein provided.
    3. Repayment of said Loan Upon termination of this Residency
    Contract the Administrator shall repay to the Resident portion
    of the principal sum loaned as follows:-
    (a) If the Resident shall have been or been entitled to be in
    occupation of the said Unit for less than twelve (12) calendar
    months 90% of the said loan;
    (b) If the Resident shall have been or been entitled to be in
    occupation of the said Unit for more than twelve (12) calendar
    months but less than twenty four (24) calendar months 85% of the
    said loan;
    (c) If the Resident shall have been or been entitled to be in
    occupation of the said Unit for more than twenty four (24)
    calendar months 80% of the said loan;
    (d) The said sum shall be accepted by the Lender in full and
    final satisfaction of repayment of the said loan.
    4. Repayment of the said loan by the Administrator to the
    Lender as provided for in Clause 3 hereof shall be on or before
    one hundred and eighty (180) days of the date of termination of
    the Residency Contract.
    (a) The Administrator shall be entitled to deduct from the Loan
    repayment any sum which shall be outstanding pursuant to the
    Residence Contract.
    5. Miscellaneous The Administrator shall be under no obligation
    to repay any amount under the provisions of this Agreement until
    the Resident shall deliver up vacant possession of the said
    Unit." 17. The contract included covenants by the Resident to pay the Administrator a quarterly fee of $3,640 which was payable in fortnightly instalments. Other clauses provided for the manner in which residents could use their units, required residents and their visitors to comply with the residence rules and included covenants on the part of the Administrator as to quiet enjoyment and possession of the units and as to the maintenance of the premises. Clause 18 provided for termination of the tenancy. It is the only provision in the contract which stipulates the term of the occupancy. The relevant parts of clause 18 provide:
    "18. Termination of Residency Subject to Section 7 of the
    Act the right of occupation of the Resident hereunder shall not
    be terminated unless:
    (a) The Resident dies.
    (b) The Resident terminates this Agreement or ceases to reside
    in Sunset Rest Home in circumstances in which there is no
    reasonable prospect of the Resident returning to reside in
    Sunset Rest Home." 18. It is agreed for the purpose of this action that, when Mr Brown left the Sunset Rest Home, he ceased to reside in the Home in circumstances in which there was no reasonable prospect of his returning to reside there: see clause 18(b). In the case of Mr Brown the Residence Contract terminated on 5 August 1990. The sum of money referred to in clause 2 and which is the amount of the loan referred to clause 3 was $69,000 in the case of both Mrs Chambers and Mr Brown. It is the interest free loan referred to in Recital D in consideration of which the right of occupation was granted. 19. The first question is whether the Sunset Rest Home constituted a retirement village as defined by the Retirement Villages Act. If it did not, the plaintiffs are not entitled to the protection of the Act. 20. Section 4 provides that the Act applies to retirement villages established either before or after the commencement of the Act. Section 4 also provides that the Minister may confer exemptions from the Act or from specified provisions of the Act. No exemption applies in the circumstances of this case. 21. Section 3 of the Act defines a "retirement village" to mean: "a complex of residential units or a number of separate complexes of residential units (including appurtenant land) occupied or intended for occupation under a retirement village scheme". 22. There are three aspects to the definition. It requires:
     . residential units,
     . a complex of residential units or a number of separate
        complexes of residential units, and
     . that the residential units are occupied or intended for
        occupation under a retirement village scheme. 23. The definition is plainly intended to include a number of different kinds of retirement village. The width of the definition is in recognition of the wide variety of types of retirement villages which exist and the different kinds of accommodation provided in them. It will be noticed that, in order that premises or a group of premises should constitute a retirement village, it is not necessary that they should be occupied as such. It will be sufficient if they are intended for occupation under a retirement village scheme. Another issue can be put to one side. The definition contains nothing which prescribes the size of a retirement village. The Act also defines a "retirement village scheme" to mean:
    "a scheme established for retired persons and their spouses,
    or predominantly for retired persons and their spouses, under
    which -
    (a) residential units are occupied in pursuance of lease or
    licence;
    (b) a right to occupation of residential units is conferred by
    ownership of shares;
    (c) residential units are purchased from the administering
    authority subject to a right or option of repurchase;
    or
    (d) residential units are purchases by prospect residents on
    conditions restricting their subsequent disposal, but does not
    include any such scheme under which no resident or prospect
    resident of a residential unit pays a premium in consideration
    for, or in contemplation of, admission as a resident under the
    scheme" 24. It will be noticed that the expression "residential units" appears in the definition of both a retirement village and a retirement village scheme. What is embraced by the expression "residential unit" is an important factor in the resolution of the issues in this action. I will return to that question. 25. In this context the word "scheme" denotes a plan or project. I do not think that the use of the word "established" necessarily requires that residential units are erected and ready for occupation, that all administrative arrangements are in place, and all necessary documentation exists evidencing the terms and conditions on which residential units are held or occupied. Such a construction could defeat the interests of persons who had invested in a retirement village yet to be constructed. What is necessary is that there is objective evidence of a plan or proposal to establish a retirement village which provides accommodation of the kind referred to in the definition of "retirement village scheme" and on the terms proposed in the definition. It is not necessary in this case to determine precisely what is required to prove the existence of a scheme. If it is assumed that residential units were available at Sunset Rest Home, there is clear evidence of a scheme to provide residential units for retired persons and that it was a retirement village scheme as defined. 26. The existence of the scheme is demonstrated first by the existence of the building and the carrying out of renovations to that building in a manner which provided residential accommodation. The fact that the necessary administrative arrangements were in place can be inferred from the fact that Mrs Chapman remained at Sunset Rest Home until her death and Mr Brown remained there until ill health required him to seek alternative accommodation in August 1990. 27. Next, the scheme was established for retired persons. Retired persons are defined in s.3 to means persons over the age of 55 years who have retired from full-time employment. Mrs Jeremic gave instructions to her agent as to the kind of person she wished to occupy the premises. Included in those instructions was the requirement that they had to be over the age of 55 years. There is no direct evidence that the agent was instructed to ensure that the persons over 55 years had also retired from full-time employment but it can, I think, be readily inferred that such an instruction was given. In the event, the only five occupants of the premises were all well over the age of 55 years and not in full-time employment. It is to be noted also that the definition will be satisfied if the scheme is established predominantly for aged persons. 28. Thirdly, there was in place the documentation to give effect to the scheme. Residence Contracts had been executed by Mrs Chapman and Mr Brown and they proved the right of occupation, the terms and conditions of occupation, and the contractual right to recover a portion of the loan upon completion of the occupation. I do not think that the definition requires that all of the documents required by s.6 of the Act should be in existence. A requirement of that kind would prejudice those rights of residents which the Act obviously seeks to protect. It would also render the rights of residents vulnerable to the failure of the administrator or owner of the retirement village to comply with the Act. In this case, in addition to the Residence Contract, there was a notice to prospective tenants setting out the rights of residents, a copy of the residence rules and a checklist in the form of Schedule 2 of the Act, all of which are documents required by s.6 of the Act. The notice to prospective residents stated that it was given pursuant to s.6 of the Rest Home Act 1987. There is no such Act. The notice also frequently refers to a rest home instead of a retirement village. It is not clear whether the reference to a rest home or to the non-existent Rest Home Act was deliberate or intentional. It is not necessary to resolve that question. The only relevant question is whether the Sunset Rest Home is a retirement village as defined by the Act. 29. It is common ground that the Residence Contract provided a licence to occupy a room at the Sunset Rest Home. Although the contract did not specify a named unit, I do not think that rendered the contract unenforceable. Both Mrs Chambers and Mr Brown occupied one room only and the room was clearly capable of identification. Each would, therefore, have been able to enforce the contract. 30. The proviso to the definition of a retirement village scheme is curiously expressed. I think the intention is that, provided at least one resident or prospective resident pays a premium and the other elements of the definition are satisfied, there is a retirement village scheme. A "premium" is defined in s.3 of the Act to mean: "a payment (including a gift) made to the administering authority of a retirement village in consideration for, or in contemplation of, admission of the person by or on whose behalf the payment was made as a resident under a retirement village scheme (including any such payment made for the purchase of a residential unit in a retirement village or for the purchase, issue or assignment of shares conferring a right to occupy any such residential unit)..." 31. It was paid to the administering authority. If the Sunset Rest Home was a retirement village, the sum of $69,000 paid by Mrs Chambers and Mr Brown was plainly paid in consideration for or in contemplation of admission by them to the Sunset Rest Home. In this case, therefore, there were at least two residents who had paid a premium and, notwithstanding that other persons later occupied the premises and did not pay a premium, the proviso is satisfied. 32. Thus, if the assumption is made that the right of accommodation provided by each Residence Contract was in respect of a residential unit, all of the requirements of the definition of a retirement village scheme would be satisfied. A retirement village scheme would, therefore exist in respect of the Sunset Rest Home. As I understand the argument at the trial, there was no significant dispute on that issue. 33. The main dispute at the trial was whether each of the rooms occupied by Mrs Chambers and Mr Brown was a "residential unit" as defined by the Act. Section 3 of the Act defines a "residential unit" to mean: "premises or part of premises designed for separate occupation as a place of residence and includes a hostel unit." 34. The rooms were not premises designed for separate occupation as a place of residence. That part of the definition refers to a complete building. The question is whether the rooms were either part of premises designed for separate occupation as a place of residence or a hostel unit. 35. I have some difficulty in understanding what is intended by the expression "part of premises designed for separate occupation as a place of residence". The adjectival phrase "designed for separate occupation as a place of residence" qualifies the whole of the expression "part of premises". Is it intended that the phrase should qualify only the word "premises" or the whole of the expression "part of premises". In other words, does it mean "a part of premises which premises are designed for separate occupation as a place of residence" or does it mean "a part of premises which part is designed for separate occupation as a place of residence"? If the former is the correct meaning, the rooms occupied by Mrs Chambers and Mr Brown were residential units as defined. If the latter is the correct interpretation of the definition, it is doubtful whether the rooms they occupied were residential units. However, whatever may be the correct interpretation, on balance I think the former is the proper construction of the definition, the rooms occupied by Mrs Chambers and Mr Brown were, I think, hostel units and thus satisfied the definition of residential units. I turn to that question. 36. When determining whether a bedroom is a hostel unit, it is important to remember that hostels, like other forms of residential building, can take a number of forms and that a wide variety of hostel accommodation is available. There are youth hostels, hostels for students, hostels for nurses, and hostels for the poor or indigent. Other kinds of hostel include working men's hostels (see, for example, Re Niyazi's Will Trust (1978) 1 WLR 910 and Transfield (Adelaide) Pty Ltd v City of Port Augusta (1982) 29 SASR 467), Salvation Army hostels, and hostels for battered wives or unmarried mothers. The word "hostel" does not necessarily connote circumstances of need. Some hostels such as YMCA and YWCA hostels provide accommodation for limited periods of time to persons who are not necessarily in need. Other hostels provide long term accommodation. Hostel accommodation for elderly persons is a good example of hostels providing long term accommodation to persons who are not necessarily needy. 37. As might be expected from the list of kinds of hostels I have mentioned, the nature and standard of hostels varies quite considerably. It cannot be said there is only one form of hostel accommodation. Nor can it be said there is only one form of hostel unit. Beginning with what might be the most basic kind of hostel accommodation, there are hostels which provide dormitory style bedroom accommodation with shared bathing and eating facilities. It is not possible to find in such a hostel anything which constitutes a hostel unit. 38. Next up the scale are those hostels which provide separate individual bedrooms but with shared bathing and eating facilities. The shared bathing facilities may take a number of different forms. They may consist of one large common bathroom or several bathrooms. In some cases, a bathroom may be situated between two bedrooms for the exclusive use of the occupants of the two bedrooms. A higher standard of hostels are those which provide separate bedrooms with private en suite bathrooms but have shared eating and other communal facilities. In yet a fourth style of hostel accommodation, there is the bedroom and en suite bathroom with other private facilities such as a kitchenette or some other facility for preparing meals in addition to shared eating facilities. Thus, some hostels provide more elaborate units and a higher standard of accommodation than others. As the definition of "residential units" plainly recognises, residential accommodation for retired persons includes hostel units. Apart from the first, all of the kinds of hostel units I have mentioned are to be found in retirement villages. 39. In each of the last three broad categories of hostel accommodation I have mentioned, it is possible to identify something which could fairly be described as a hostel unit which is exclusively occupied by an individual to the exclusion of others. At the very least a hostel unit is a bedroom. The expression is capable of referring to other types of units providing more than a bedroom and may include a suite of rooms providing a variety of facilities. The expression "hostel unit" is capable, therefore, of referring to a wide range of different types of accommodation and it cannot be said that it denotes one kind or style of accommodation. I do not think that there is any logical basis for saying that any one of those types of accommodation is not a hostel unit. 40. Given the variety of types of hostel accommodation available and the different standard of hostel accommodation, it is not possible to state that the meaning of the expression "hostel unit" is limited to a bedroom with en suite bathroom or to any other combination of facilities. The expression is capable of referring both to units in a hostel which comprise a bedroom only, where occupants share bathing, eating and other communal facilities, and to units in a hostel with en suite bathroom accommodation and I think it is the intention of the Act that it does so. The manifest intention of the Act is to protect the financial and other interests of those who take up accommodation in retirement villages. The concept of residential units is an essential, if not central, part of the definition of retirement village and retirement village scheme. It refers to the accommodation provided to those who take up residence. The definition of "residential unit" should, therefore, be given the fullest meaning that a fair reading of the definition will allow: cf. Bull v Attorney-General (NSW) (1913) 17 CLR 370 at 384; Waugh v Kippen (1986) 64 ALR 195 at 200; and Pearce and Geddes, Statutory Interpretation in Australia (3rd ed.) paras. 9.1 to 9.6. The object of the Act could be defeated if a narrow and restrictive interpretation were given to the definition of a residential unit. In particular, persons whose residential accommodation consists of a unit comprising a bedroom only would not be able to avail themselves of the protection afforded by the Act. Given the variety of hostel accommodation available for retired persons, I do not think that could have been Parliament's intention. 41. For these reasons I have decided that the definition of "residential unit" extends to and includes accommodation consisting of a bedroom only where the occupant has the use of shared bathing, eating and other facilities. The bedroom can fairly be described as a unit. It is exclusively for the use of one individual. 42. I acknowledge the fact that the word "unit" could be understood to refer to something more than a bedroom. However, the question then is, what is required to constitute a unit. Is the concept of a unit satisfied by a bedroom and en suite bathroom for the exclusive use of the occupant of the bedroom? Or is it satisfied in the case of two bedrooms sharing one bathroom? Or does it require something more such as a small kitchen and dining facility? If it is the last kind of unit, many types of hostel accommodation provided for aged people would be excluded from the provisions of the Act. That could hardly have been the intention of the Parliament. As I have said, I think it is the intention to include all of these kinds of accommodation in the concept of hostel units. The bedroom accommodation the subject of the Residence Contracts to which Mrs Chambers and Mr Brown were party was, therefore, a residential unit. There is no basis for distinguishing between the two bedrooms occupied by Mrs Chapman and Mr Brown and the other bedrooms at the Sunset Rest Home. All of the bedrooms on the ground floor were, therefore, residential units. Though the occupants were required to share the bathrooms and used a common dining room, there was a complex of residential units on the ground floor and the Sunset Retirement Home was, therefore, a retirement village as defined. The rooms on the first floor were occupied by those who administered the Home and can fairly be regarded as part of the retirement village. 43. In the course of argument it was suggested that the Sunset Rest Home was more appropriately characterised as a boarding house. I do not agree. Payment for accommodation in a boarding house is usually a weekly, monthly or other periodical payment. In this case, the payment of the premium for an occupancy for life or until the Residence Contract was determined immediately distinguishes the Sunset Rest Home from a boarding house. 44. I turn to the question whether Mr Brown and the estate of Mrs Chambers are entitled to recover that portion of the loan repayable to them in priority to the Bank. 45. The contractual rights of residents of retirement villages to recover premiums paid by them under a contract providing that in certain events it will be repaid in whole or in part are protected by a number of provisions of the Act most of which are contained in Part II. In particular, s.9 provides for the means of recovering payment of a premium. Section 9(2) of the Act provides: "Where a premium is paid under a contract providing that it will be repaid in whole or in part on the happening of a contingency and the contingency occurs, the resident or a person claiming under the resident may recover the amount that is repayable as a debt from the administering authority, for the time being, of the retirement village." Section 9(4) provides that the rights of a resident to repayment of a premium or part of a premium are a charge on the land in the retirement village. Those rights are qualified to the extent that residential units owned by residents or common property in a retirement village the subject of a strata plan are excepted from the charge. The charge created by s.9(4) ranks in priority to any other mortgage charge or encumbrance over the land to which the charge relates: s.9(4a). The charge can only be enforced with the approval of this Court. I set out the provisions of sub-sections (4), (4a), (5) and (6) of s.9:

    "(4) The rights of a resident to repayment of a premium, or
    part of a premium, are a charge on land in the retirement
    village other than -
    (a) a residential unit owned by a resident; or
    (b) common property in a strata retirement village.
    (4a) The charge referred to above ranks in priority to any other
    mortgage, charge or encumbrance over the land to which the
    charge relates.
    (5) The charge referred to above can only be enforced -
    (a) with the approval of the Supreme Court; and
    (b) subject to any conditions to which the Supreme Court's
    approval is subject.
    (6) If the Supreme Court approves the enforcement of the charge
    it may, subject to the conditions stipulated by the Court, be
    enforced in the same way as a mortgage registered under the Real
    Property Act, 1886." 46. At this stage, the plaintiffs each seek a declaration that the charge created by s.9(4) ranks in priority over the Bank's first mortgage. 47. Section 9(4a) was introduced into the Act by the Act No 12 of 1990. Section 2 of the amending Act provided that s.9(4a) should be taken to come into operation on 30 June 1987, the date when the principle Act had commenced operation. Section 9(4a), therefore, has a retrospective operation to 30 June 1987. All of the transactions the subject of this action occurred after 30 June 1987 so that the parties are bound by s.9(4a). 48. It will be immediately noticed that there is inconsistency between s.9(4a) and the provisions of the Real Property Act giving priority in respect of registered mortgages. 49. The Bank submits that the charge created in favour of the each of plaintiffs is not entitled to priority by reason of non-compliance with the provisions of s. 15 of the Act. Section 15 provides:
    "(1) Where land is, or is to be, used as a retirement
    village, a note of that fact must be endorsed on the relevant
    certificates of title.
    (2) The owner of any such land shall apply to the
    Registrar-General for endorsement of the relevant certificates
    of title -
    (a) If the retirement village was established before the
    commencement of this Act - within 3 months after the
    commencement of this Act;
    (b) in any other case - before any person is admitted to
    occupation of a unit in accordance with the scheme.
    Penalty: Division 3 fine.
    (3) Before an application is made under subsection (2), the
    owner must notify each person who holds a mortgage, charge or
    encumbrance over the land and, if the application relates to a
    retirement village that had not been established before the
    commencement of this Act, the application can only be made with
    the consent of each such person.
    (4) The Registrar-General may cancel an endorsement made under
    this section if satisfied that no part of the land is still
    occupied under the scheme." (A Division 3 fine is a fine of
    $30,000.) 50. Mrs Jeremic did not endorse the title of her land pursuant to s.15(1). Nor did she apply to the Bank for its consent to the application for endorsement of the fact that the land was to be used as a retirement village. The Bank, therefore, submits that, because of the non-compliance with s.15, the charge created by s.9(4a) is invalid. The Bank further submits that, by virtue of the provisions of s.6 of the Real Property Act, even if there is an inconsistency between provisions of the Retirement Villages Act and the provisions of the Real Property Act, the provisions of the Real Property Act prevail. 51. The provisions of s.15 are obviously intended to provide a measure of protection for mortgagees who hold a registered mortgage. Absent provisions of this kind, there is a real potential for the priority of mortgagees to be defeated by the creation of a charge pursuant to s.9. However, the protection for mortgagees is quite limited in its effect. One limitation is that, although the mortgagee is at liberty to refuse consent, the Act does not invalidate a charge which has been created by s.9 before the owner has applied to the mortgagee for consent. The sanction to ensure that the owner seeks that consent before the land is used as a retirement village is a fine of $30,000. But there is no provision which invalidates a charge which has been created under s.9 before the owner has applied for the consent of the mortgagee or where, as here, no application has been made for consent. Section 19 of the Act provides that this Court may excuse inadvertent non-compliance with the provisions of the Act but that provision cannot have the effect of invalidating a charge where there has been a failure to comply with s.15. 52. Mr Morcombe QC, who appeared for the Bank, submitted that had the Parliament intended to protect a charge where there had been a failure to comply with s.15 of the Act it could have easily included a provision in s.9 to that effect. He said that the failure to include such a provision indicates an intention that the failure to comply with s.15 rendered the charge invalid. If the intention of Parliament had been as Mr Morcombe submitted, it would have made that intention clear by stating that the priority created by s.9(4a) was subject to compliance with s.15. A further argument against his contention is the fact that the Parliament could as easily have included in s.15 a provision to the effect that a failure to comply with s.15 invalidated the charge. Instead, the only sanction to ensure compliance with s.15 is a fine. Given that the Retirement Villages Act is intended to protect the rights and interests of residents in a retirement village, the absence of any provision invalidating a charge for non-compliance with s.15 has the consequence that the charge will prevail even where there has been a failure to comply with s.15. To accede to Mr Morcombe's argument would have the consequence that the rights of residents would be rendered negatory by a failure of the owner of the land to comply with s.15. That would defeat the purposes of the Act and is plainly not intended. 53. It may be observed in passing that, for like reasons, a failure to comply with the provisions of s.8 does not invalidate the charge. 54. Mr Morcombe also referred to the long established principles of lending and to what he called the sanctity of the mortgage registered under the RealProperty Act. If the Parliament intends to interfere with the priority enjoyed by registered mortgage, it must do so in clear terms. Fundamental principles concerning the operation of the Real Property Act should not, he said, be altered except by express provision. For the reasons I have given, I believe the terms of s.9(4a) are such an express provision. 55. I turn to the provisions of s.6 of the Real Property Act. Section 6 provides: "No law, so far as inconsistent with this Act, shall apply to land subject to the provisions of this Act, nor shall any future law, so far as inconsistent with this Act, so apply unless it shall be expressly enacted that it shall so apply `notwithstanding the provisions of The Real Property Act, 1886'." 56. The operation of s.6, where a later enactment is inconsistent with the Real Property Act but does not include the formula prescribed by s.6, was considered in South Eastern Drainage Board (SA) v Savings Bank of South Australia (1939) 62 CLR 603; see also Travinto Nominees Pty Ltd v Vlattas
(1973) 129 CLR 1 at 33-35. In such a case, where the provisions of the Act exhibit a manifest intention to prevail over the provisions of the RealProperty Act and there is any inconsistency between them, the latter prevails: see South Eastern Drainage Board (SA) v Savings Bank of South Australia at 616 and at 624-626; Travinto Nominees Pty Ltd v Vlattas at 33-35. To adopt the words of Dixon J in the South Eastern Drainage Board Case (at 625) the Retirement Villages Act, which is the later enactment, contains clear language from which it is plain that its provisions were intended to apply to land under the Real Property Act and to apply in a manner inconsistent with the Real Property Act. It is not possible to reconcile the provisions. Notwithstanding the failure to include the formula prescribed by s.6 of the Real Property Act, the provisions of the Retirement Villages Act must operate according to their meaning. The provisions of s.9(4a), therefore, prevail over the provisions as to priority of registered mortgages contained in the Real Property Act. 57. The charge created by s.9 can only be enforced with the approval of this Court: s.9(5). If the Court approves the enforcement of the charge it may, subject to any condition stipulated by the Court, be enforced in the same way as a mortgage registered under the Real Property Act: s.9(6). I do not think that sub-sections (5) and (6) of s.9 affect the priority as between the holder of the charge and the mortgagee. I think these provisions have been included for the purpose of protecting the rights of other occupants of retirement villages, lest the enforcement of the charge adversely affect their interests. Section 9(4) prevents the enforcement of a charge against residential units owned by other residents or against common property in a retirement village the subject of a strata plan. There are of course other rights of occupation in addition of a retirement village apart from ownership. For example, as the definition of a retirement village scheme contemplates residential units may be occupied pursuant to a lease or licence. Section 9(6) is yet another instance of the concern of the Parliament expressed in this Act to ensure that the rights and interests of other occupants of a retirement village will not be prejudiced. It has expressed that concern by providing a means to ensure that the enforcement of the charge by one of the residents will not cause hardship, for example, by dispossessing any resident. No such considerations exist in the circumstances of this case. The contest here is simply between the holders of a charge and the mortgagee. For all of these reasons there will be declarations as follows.
1. A declaration that the charge in respect of the right of the plaintiff Brown to repayment of a premium pursuant to the agreement in writing dated the 25th day of January 1990 between the plaintiff Brown and Magdalena Jeremic ranks in priority to the Mortgage registered No 6494056.
2. A declaration that the charge in respect of the right of the estate of Evelyn Ruby May Chambers to the repayment of a premium pursuant to the agreement in writing between Magdalena Jeremic and Evelyn Ruby May Chambers deceased ranks in priority to the Mortgage registered No 6494056. I will hear the parties as to the terms of any consequential orders.