KEYTON HOLDINGS PTY LTD - [2024] SASC 66

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
KEYTON HOLDINGS PTY LTD
[2024] SASC 66
Judgment of the Honourable Justice McIntyre
REAL PROPERTY - RETIREMENT VILLAGES
The applicant operates a Retirement Village Scheme; the Townsend Park Retirement Village and wishes to excise a portion of land from the Scheme, proposed allotment 101, in order to facilitate the construction of an aged care facility on that allotment. The applicant seeks orders under s 58 of the Retirement Villages Act 2016 (SA) to either partially terminate the Scheme or, in the alternative, to terminate the entire Retirement Village Scheme on condition that there be established a new scheme operated by the applicant in respect of the land, except for the proposed allotment 101, with the residents’ contracts to continue, in effect, as though they were entered into under the new scheme.
Held: The Court has the power to approve the partial termination of the Scheme and it is appropriate in these circumstances to exercise the discretion to permit partial termination of the Retirement Village Scheme.
Retirement Villages Act 2016 (SA) ss 3, 4, 12, 13, 20, 21, 22, 24, 27, 37, 44, 56, 58, 59; Retirement Villages Act 1992 (WA) ss 3, 15, 17, 21, 22; Retirement Villages Act 1987 (SA); Real Property Act 1886 (SA), referred to.
Retirement Care of Australia (Hollywood) Pty Ltd v Commissioner for Consumer Protection [2013] WASC 219, discussed.
Brown v Commonwealth Bank of Australia (1993) 63 SASR 188, considered.

KEYTON HOLDINGS PTY LTD
[2024] SASC 66
Civil: Application

McINTYRE J: The applicant, Keyton Holdings Pty Ltd (‘Keyton’), operates a Retirement Village Scheme (‘Scheme’); the Townsend Park Retirement Village (‘Village’). Keyton wishes to excise a portion of land from the Scheme, proposed allotment 101, in order to facilitate the construction of an aged care facility on that allotment. Keyton seeks orders under s 58 of the Retirement Villages Act 2016 (SA)[1] (‘the SA Act’) to either partially terminate the Scheme or, in the alternative, to terminate the entire Scheme on condition that there be established a new scheme operated by the applicant in respect of the land, except for the proposed allotment 101, with the residents’ contracts to continue, in effect, as though they were entered into under the new scheme.
[1] Retirement Villages Act 2016 (SA) (‘SA Act’).
The application raises a number of issues as follows:
·Does the Court have the power to approve the partial termination of the Scheme?
·If the Court does have power to approve a partial termination:
· What factors are relevant to the exercise of the discretion?
· Is it appropriate to exercise the discretion to permit partial termination of the Scheme?
·If partial termination is not permitted, is it appropriate to order that the entire Scheme be terminated on the basis contended for by Keyton?
For the reasons that follow I find that the Court has the power to approve a partial termination of the Scheme under s 58 of the SA Act. I further find that it…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: KEYTON HOLDINGS PTY LTD [2024] SASC 66
Case: [2024] SASC 66
Decision Date: 21 May 2024

CaseChat Overview and Summary

The case before the Supreme Court of South Australia involves Keyton Holdings Pty Ltd, the operator of a retirement village, and the Minister for Elder Affairs, who is seeking to protect the interests of the village residents. Keyton has applied for the partial termination of the retirement village scheme to allow the construction of a residential aged care facility adjacent to the village. The primary legal issue before the court was whether the court had the power to approve the partial termination of the retirement village scheme under Section 58 of the Retirement Villages Act 1999 (SA). Additionally, the court needed to determine if it was appropriate to exercise this discretion in the specific circumstances of this case. The court concluded that it indeed had the authority to approve a partial termination of the scheme under Section 58 of the SA Act and found it appropriate to approve the partial termination to exclude the proposed allotment 101 from the village. The court based its decision on several factors, including the attitudes of the residents and the operator, potential benefits or detriments to the residents, the impact on the capital value of independent living units, adherence to resident contracts, and the value of the remaining land in relation to the aggregate exit entitlements of residents. The court found these factors relevant and necessary for the exercise of its discretion under Section 58(3) of the SA Act.

The court's reasoning was grounded in the need to balance the rights and obligations of the operator and the residents, with a focus on protecting the residents' wellbeing, amenity, safety, security, and legal rights. The court rejected the notion that broader public or community interests should be considered, as these were not explicitly mentioned in the relevant sections of the SA Act. Instead, the court emphasized that any relevant considerations must be directed or referable to eligible persons within the meaning of the SA Act. The court also noted the lack of aged care beds in the locality as relevant to the benefits of the proposal to the residents, as most residents who leave the village do so to take up accommodation in aged care facilities. The court will hear from the parties on the conditions that should be imposed and the terms of the orders to be made.

Orders

Orders of the court

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Background

Background to the litigation

For the reasons that follow I find that the Court has the power to approve a partial termination of the Scheme under s 58 of the SA Act. I further find that it is appropriate in the circumstances of this matter to approve a partial termination to excise proposed allotment 101 from the Village. I will hear the parties as to the conditions that ought be imposed and the terms of the orders to be made. Background The facts are not contentious and are established by the affidavit and other material tendered at trial. The Village is located in the coastal surrounds of Hove. The Village currently comprises some 127 separate residences, community areas and open space. The residences consist of free-standing villas or independent living units (‘ILUs’) and independent living apartments (‘ILAs’). The number of residents varies from time to time but as at 26 March 2024 there were 120 occupied residences and 171 residents.[2][2] Exhibit A5 at [10]. Prior to the purchase of the Village by Keyton, the former operator, Townsend House Inc, undertook four phases of development of the Village constructing:[3] ·ILUs 1 to 25 located at Samuel Johnson Close, known as ‘Stage 1’ in about 2003;·ILUs 26 to 49 located at Lawrence Barkham Court, known as ‘Stage 2’ in about 2004;·ILUs 50 to 61 located at John Rogers Circuit and ILAs 62 to 108, known as ‘Stage 3’ in about 2006 to 2007; and·ILUs 109 to 114 located at Harold Raymond Close, known as ‘Stage 4’ in about 2008. [3] Exhibit A1; FDN 11 at [13]-[20]. Following Keyton’s acquisition of the Village in 2016, it constructed an additional 13 ILUs numbered 115 to 127 located at Townsend Drive known as ‘Stage 5’ between September 2017 and May 2018. The Village has a total land size of 65,300m² including:[4]·852m² in community areas, which include a community building, alfresco activities area and Townsend House, a heritage building;·20,508m² of open space, which includes caravan storage, a potting shed, a barbeque area and green space; and ·18,099m² in residential living, which comprises a three-storey apartment block and villas. There are 80 ILUs and 47 ILAs; a total of 127 residences. [4] Exhibit A1 at 2250 at [3.3]. The village land comprises four parcels of land. This includes the parcel of land that is the subject of these proceedings; certificate of title volume 5996, folio 444 being allotment 65 in deposited plan 74085 (‘allotment 65’).[5] [5] Exhibit A1; FDN 2 at [17]-[18], SME-2, SME-3, SME-4. Keyton wishes to build a residential aged care facility adjacent to the Village.[6] Keyton contends that the co-location of aged care facilities with a retirement village has a number of benefits. First, that residents, or partners of residents, have options for higher care in one location; and aged care operators can provide in home care services to residents of retirement villages to assist those residents to remain in their homes for a longer period of time. [6] Ibid at [10]-[13].

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The Minister noted that this is the first application of its type before the Supreme Court of South Australia. The Minister says that it is important in this context for the Court to consider the relevance, if any, of a decision of the Supreme Court of Western Australia, Retirement Care of Australia (Hollywood) Pty Ltd v Commissioner for Consumer Protection[41] (‘Hollywood’) which is the only Australian decision in which the question of partial termination of a retirement scheme been considered. [41] [2013] WASC 219 (‘Hollywood’). The Hollywood Decision The Hollywood decision concerned an application by a retirement village operator to partially terminate a retirement village scheme under the Retirement Villages Act 1992 (WA) (‘the WA Act’). The operator managed a retirement village in Nedlands, WA. It subdivided the land into two allotments, Lot 888 and Lot 889. Lot 889 formerly comprised independent living units, a dementia hostel, an auditorium, a medical centre, and a community centre. The operator demolished all improvements on Lot 889 leaving it vacant. The demolition was part of a development plan to sell Lot 889 and to construct a new aged care facility, nursing home, community centre and other facilities. To facilitate the sale of Lot 889, the operator applied to the Supreme Court to, in effect, partially terminate the retirement village scheme operating over Lot 889 by seeking:[42]·An order granting approval for the termination of the retirement village scheme on Lot 888 and Lot 889 under s 22 of the WA Act; ·A declaration that the charges under the memorial over Lot 889 have been satisfied, extinguished or determined and no longer affect that Lot;[43] and·A declaration that immediately the order takes effect there is a retirement village scheme being conducted on Lot 888. [42] Hollywood at [60] – [64].[43] Section 15 of the WA Act required that where land is used or proposed to be used for the purposes of a retirement village, the owner of the land must lodge a memorial with the Registrar of Titles. The Memorial in Hollywood noted that the land may be subject to a charge securing repayment of money to residents of the village under s 20 of the WA Act. Some of the residents of the retirement village opposed the application. Section 22 of the WA Act is in similar terms to s 58 of the South Australian Act and provides as follows:[44] [44] Retirement Villages Act 1992 (WA) s 22.(22) Termination of retirement village scheme (1)A retirement village scheme cannot be terminated without the approval of the Supreme Court while a person who has been admitted to occupation of residential premises under the scheme remains in occupation of those premises. (2)The Commissioner will be a party to any proceedings in which the Supreme Court's approval of the termination of a retirement village scheme is sought. (3)If the Supreme Court approves the termination of a retirement village scheme it may make such orders as it thinks necessary to protect the interests of existing residents.

Ratio Decidendi

Legal Principle Established

I conclude that the Court does have the power to approve the partial termination of the Scheme sought by Keyton under s 58 of the SA Act. The question is then whether it is appropriate in the circumstances of this case to exercise the discretion to do so. The discretion – what are the relevant considerations? There has not been any prior consideration of the factors the Court ought to take into account in considering the exercise of its discretion to approve the termination or partial termination of a retirement village under s 58(1). The SA Act provides a regulatory framework for the operation of retirement villages under which a balance is achieved between the resident’s rights and the rights and responsibilities of operators. Resident’s rights include contractual entitlements; limits upon the terms and conditions of residence contracts; financial matters including the preservation of resident’s exit entitlements; consultation and disclosure requirements; resident’s committees and dispute resolution mechanisms. I consider that these matters inform the factors relevant to the Court’s discretion and that it is necessary that there be some nexus between the factors going to the discretion and residents or “eligible persons” under the SA Act. I further consider that the reference in s 58(3) to the Court’s ability to “make such orders as it thinks necessary to protect the interest of the existing residents” extends to matters necessary to protect residents’ wellbeing, amenity, safety, security including financial security and legal rights. I accept Keyton’s submissions, supported by the Minister, that, among the relevant considerations, are:[51] (a)the attitude of residents and the operator;(b)whether there are benefits to residents and, conversely, whether the proposal may result in any detriment to residents (during and or following the construction phase);(c)whether the proposal would impact upon the capital value of independent living units;(d)whether the proposal would involve a breach of any resident contracts; and(g)whether the remaining land in respect of which the statutory charges would apply has a value that will exceed the aggregate exit entitlements.[51] FDN 53 at [6.4]. This list is not exhaustive as the relevant factors may vary according to the circumstances of each application. In this matter Keyton also suggested that a relevant factor to be considered was the position that will result if the proposal does not proceed pointing to broader considerations relating to the public or community interest in the locality.[52] The Minister did not support that proposition contending, correctly in my view, that the relevant considerations must be directed or referable in some way to eligible persons within the meaning of the SA Act. There is no obvious textual or contextual basis in ss 58 or 59 to read in public or community interests in the locality as a relevant consideration. [52] Ibid. Keyton relies upon the lack of aged care beds in the locality of the Village as providing a public interest basis for the exercise of the discretion.[53] Whilst there is undoubted public interest in the provision of aged care beds, I do not consider that the public interest aspect of this consideration is relevant to the balancing of the respective rights and obligations of the operator and residents. The lack of aged care beds in the locality is however undoubtedly of relevance to a consideration of the benefits of the proposal to the residents given that the affidavit of Mr Emmitt indicates that most residents who leave the Village do so to take up accommodation in aged care.[54] [53] Exhibit A6 at [20]-[22].[54] Exhibit A1; FDN 2 at [12].Is it appropriate to permit partial termination of the Scheme in this matter?