Murphy v Overton Investments Pty Ltd
[2000] FCA 801
•15 JUNE 2000
FEDERAL COURT OF AUSTRALIA
Murphy v Overton Investments Pty Ltd [2000] FCA 801
TRADE PRACTICES – misleading or deceptive conduct – where statements that prospective lessees would be able to “afford” to live at a retirement village – whether statements were misleading or deceptive or likely to mislead or deceive – whether statements affected decision to enter into lease
TRADE PRACTICES – misleading or deceptive conduct – where representation as to estimated maintenance fee payable by lessees – where failure to disclose fact that calculation of maintenance fee did not cover all expenditure being incurred in the operation of the retirement village – whether representation as to estimated maintenance fee would fairly give rise to an expectation that there would be disclosure of the fact that certain expenditure had not been taken into account – whether failure to disclose misleading or deceptive or likely to mislead or deceive
TRADE PRACTICES – loss or damage – whether more likely than not that lease would not have been entered into if prospective lessees informed that estimated maintenance fee did not accurately reflect expenditure incurred – when loss or damage suffered – whether loss or damage suffered on entry into the lease – whether loss or damage suffered some time after entry into the lease – nature of obligation under the lease – when entitlement to reimbursement arose – when liability to reimburse arose – whether loss or liability contingent – whether cause of action statute-barred
TORTS – negligent advice – where statement that prospective lessees would be able to “afford” to live at a retirement village – where parties at arms length – whether duty of care – whether reasonable to rely on statements made
TORTS – negligent advice – where statement as to accuracy of a budget – whether duty of care – whether breach – when loss suffered – whether cause of action statute-barred
EQUITY – estoppel – whether statements constituted a promise that strict legal rights would not be insisted upon – whether an assumption induced that all expenditure incurred or likely to be incurred in operating the retirement village had been included in the maintenance fee estimate – whether unconscionable to depart from that assumption – whether reasonable notice of intention to depart from assumption
CONTRACT – whether lease unjust pursuant to the Contracts Review Act 1980 (NSW), s 7 – whether jurisdiction to make orders varying or terminating the lease
Constitution Ch III
Federal Court Act 1976 (Cth) Pt IVA
Trade Practices Act 1974 (Cth) ss 51, 52, 82, 87
Contracts Review Act 1980 (NSW) ss 4, 7
Retirement Villages Act 1989 (NSW)
Limitation Act 1969 (NSW) s 14
Real Property Act 1900 (NSW)Silkfield Pty Ltd v Wong (1998) 159 ALR 329 cited
Wong v Silkfield Pty Ltd [1999] HCA 48 cited
Hawkins v Clayton (1988) 164 CLR 539 referred to
Murphy v Overton [1999] FCA 1123 cited
Murphy v Overton [1999] FCA 1673 cited
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 considered
Potts v Miller (1940) 64 CLR 282 referred to
Commonwealth v Verwayen (1990) 170 CLR 394 referred to
Fencott v Muller (1983) 152 CLR 570 referred to
Stack v Coasts Securities (No 9) Pty Ltd (1983) 154 CLR 261 referred to
Re Wakim; Ex parte McNally (1999) 163 ALR 270 referred to
Smith v Smith (1986) 161 CLR 217 appliedJOHN JAMES MURPHY v OVERTON INVESTMENTS PTY LIMITED
N 159 OF 1999
DAPHNE MURPHY v OVERTON INVESTMENTS PTY LIMITED
N 946 OF 1999
EMMETT J
15 JUNE 2000
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 159 OF 1999
BETWEEN:
JOHN JAMES MURPHY
APPLICANTAND:
OVERTON INVESTMENTS PTY LIMITED
RESPONDENTN 946 OF 1999
BETWEEN:
DAPHNE MURPHY
APPLICANTAND:
OVERTON INVESTMENTS PTY LIMITED
RESPONDENT
JUDGE:
EMMETT J
DATE:
15 JUNE 2000
PLACE:
SYDNEY
REASONS
INDEX
PREAMBLE……………………………………………………………………………….paragraph [1]
THESE PROCEEDINGS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... paragraph [4]
THE PLEADINGS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. paragraph [10]
THE LEGAL STRUCTURE OF UNITS IN THE HERITAGE VILLAGE........ ........ .. paragraph [24]
CONTRIBUTIONS TO OUTGOINGS BY LESSEES........ ........ ........ ........ ........ ....... paragraph [28]
LAY WITNESSES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. paragraph [31]
THE NEGOTIATION OF THE LEASE........ ........ ........ ........ ........ ........ ........ ........ .... paragraph [38]
MR MURPHY’S UNDERSTANDING AS AT 20 OCTOBER 1992........ ........ ........ ... paragraph [84]
OVERTON’S CHANGE OF APPROACH........ ........ ........ ........ ........ ........ ........ ........ paragraph [86]The March Documentation........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... paragraph [87]
The Meeting of 31 March 1994........ ........ ........ ........ ........ ........ ........ ........ ........ ... paragraph [105]
Advisory Committee Meeting of 28 April 1994........ ........ ........ ........ ........ ........ .... paragraph [110]
Advisory Committee Meeting of 30 June 1994........ ........ ........ ........ ........ ........ ..... paragraph [123]
The 18.37% Increase from 1 July 1994........ ........ ........ ........ ........ ........ ........ ........ paragraph [130]
The 1994 Accounts and the 1995 Budget for the Maintenance Fund........ ........ ...... paragraph [135]
The Involvement of TARS........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. paragraph [138]
Mr Murphy’s understanding of Overton’s position in 1994........ ........ ........ ........ ... paragraph [152]
Events of 1995 and 1996........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... paragraph [160]1992 CONTRAVENTION OF TRADE PRACTICES ACT........ ........ ........ ........ ........ paragraph [171]
NEGLIGENT ADVICE........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. paragraph [192]
LOSS OR DAMAGE........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... paragraph [202]
LIMITATION OF ACTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... paragraph [222]
PROMISSORY ESTOPPEL OR ESTOPPEL BY REPRESENTATION........ ........ .... paragraph [227]
UNCONSIONABLE CONDUCT........ ........ ........ ........ ........ ........ ........ ........ ........ ... paragraph [235]
CONTRACTS REVIEW ACT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... paragraph [238]
CONDUCT OF OVERTON DURING 1994........ ........ ........ ........ ........ ........ ........ .... paragraph [254]
RELIEF........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . paragraph [271]Valuation Issues........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . paragraph [272]
Level of Outgoings........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... paragraph [291]
Section 87 Relief........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ paragraph [293]CONCLUSION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... paragraph [302]
APPENDIX 1 - History of Litigation........ ........ ........ ........ ........ ........ ........ ........ ....... paragraph [303]
APPENDIX 2 - Relief Claimed........ ........ ........ ........ ........ ........ ........ ........ ........ ....... paragraph [323]
APPENDIX 3 - Clauses of the Lease Memorandum........ ........ ........ ........ ........ ........ . paragraph [325]
APPENDIX 4 - Clauses of the Trust Deed........ ........ ........ ........ ........ ........ ........ ....... paragraph [326]
APPENDIX 5 - Contents of the Information Booklet........ ........ ........ ........ ........ ........ paragraph [327]PREAMBLE
The respondent, Overton Investments Pty Ltd (“Overton”), owns and operates the Heritage Retirement Village located at 33 Bernard Road, Padstow Heights (“the Heritage Village”). By lease dated 20 October 1992 (“the Lease”), Overton granted a term of 99 years to John James Murphy (“Mr Murphy”) and Daphne Lucy Murphy (“Mrs Murphy”). The Lease relates to Unit 53 in the Heritage Village (“Unit 53”). Mr Murphy still resides in Unit 53. However, Mrs Murphy has become too ill to remain a resident of the Heritage Village and ceased to reside there on 1 April 1997.
Mr and Mrs Murphy claim that prior to entering into the Lease, misleading statements were made on behalf of Overton concerning the extent of their liability under the Lease to contribute to the expenses of operating the Heritage Village. They say that those statements induced them to enter into the Lease and that, as a consequence, they have suffered loss. They seek a remedy in respect of that loss.
Prior to the commencement of these proceedings, there had been a history of litigation between Overton and persons who are lessees of units in the Heritage Village (“Lessees”). The litigation concerned the liability of Lessees to contribute to operating expenses in respect of the Heritage Village. The history has some bearing on the issues raised in these proceedings. A summary of the history is contained in Appendix 4.
THESE PROCEEDINGS
Proceeding N159 of 1999 (“Mr Murphy’s Proceeding”) was originally commenced under Part IVA of the Federal Court Act 1976 (Cth) by Mr Murphy and others claiming to represent all persons who are presently Lessees. On 17 August 1999, I ordered that:
· Mr Murphy’s Proceeding no longer continue under Part IVA;
· the further amended statement of claim then filed be struck out;
· the applicants other than Mr Murphy be removed as parties;
· leave be granted to Mr Murphy to file a second further amended application and second further amended statement of claim.
In my reasons for making those orders ([1999] FCA 1123), I referred to the decision of the Full Court in Silkfield Pty Ltd v Wong (1998) 159 ALR 329. I indicated that the outcome of the appeal to the High Court from that decision could have an effect on this proceeding if the High Court were to cast doubt on the correctness of the reasoning of the Full Court. Following the decision of the High Court in Wong v Silkfield Pty Ltd [1999] HCA 48, Mr Murphy filed a notice of motion seeking an order that my orders of 17 August 1999 be varied. Having heard argument from both sides on that motion, I dismissed the application on 25 November 1999 for reasons that I then published ([1999] FCA 1673). Since then, Mr Murphy’s proceeding has continued with Mr Murphy alone as applicant. Following the orders that I made on 17 August 1999, separate proceedings were commenced on behalf of most of the other Lessees.
On 7 March 2000, I embarked on the hearing of Mr Murphy’s proceeding together with proceedings N 857 of 1999 and N 878 of 1999 brought on behalf of Mr Neville Carnegie and Mrs Rita Brasington respectively. The intention of the parties was that the three proceedings would be treated as test cases, at least on an informal basis. So far as the Court is aware, there is no agreement that the determination of those proceedings will be binding on the parties in any of the other proceedings. For the reasons that I have already given in relation to decisions on questions arising under Part IVA, there is considerable doubt as to the extent to which the same questions would arise in each proceeding. Nevertheless, it was considered to be of utility to embark on the hearing of proceedings N 159, N 857 and N 878 of 1999 together.
However, in the course of the hearing, which commenced on 7 March 2000, it became clear that the continuation of the proceedings brought by Mr Carnegie and Mrs Brasington added unnecessary complication. Evidence has been taken from Mr Carnegie but not from Mrs Brasington. On 16 May 2000, I ordered that the further hearing of those proceedings be adjourned until after the completion of Mr Murphy’s Proceeding.
On 31 August 1999, proceeding N 946 of 1999 (“Mrs Murphy’s Proceeding”) had been commenced on behalf of Mrs Murphy. On 16 May 2000 I also made orders that Mr Murphy’s Proceeding and Mrs Murphy’s Proceeding be heard together and that evidence in one be evidence in the other. It may have been more convenient for Mrs Murphy to be added as an applicant in Mr Murphy’s proceeding. However, for reasons that I understand are connected with possible limitation questions, Mrs Murphy’s proceeding has been maintained as a separate proceeding. No question has been raised concerning the capacity of Mrs Murphy to participate in these proceedings.
Because of the pendency of the proceedings brought by other Lessees referred to above, I propose to make more fulsome findings than might otherwise have been necessary to dispose of only Mr Murphy’s Proceeding and Mrs Murphy’s Proceeding.
THE PLEADINGS
Under the current statements of claim, relief is claimed under the following heads:
· damages under section 82 of the Trade Practices Act1974 (Cth) (“the Trade Practices Act”) by reason of contravention of section 52 and section 51AA of the Trade Practices Act;
· orders pursuant to section 87 of the Trade Practices Act by reason of contravention of sections 52 and 51AA of the Trade Practices Act;
· damages under the general law for negligent advice;
· declarations that as a consequence of representations made by it relating to the outgoings under the Lease, Overton is estopped from claiming contribution to outgoings in excess of a particular level;
· orders under section 7 of the Contracts Review Act 1980 (NSW) in respect of provisions of the Lease relating to recovery of outgoings generally, and relating to recovery of outgoings in the nature of legal and accounting costs and interest, in particular.
The current claims in Mr Murphy’s Proceeding are made in a third further amended application filed on 5 May 2000 and a third further amended statement of claim filed on 28 January 2000. The current claims in Mrs Murphy’s Proceeding are made in an amended application and an amended statement of claim, both filed on 17 May 2000. The relief claimed in each proceeding is set out in Appendix 2.
The current statements of claim allege that throughout the period 27 May 1992 to 20 October 1992, and continuing up to 27 November 1996, Overton made a number of representations to Mr and Mrs Murphy. Seventeen separate representations are alleged (“the Original Representations”). The statements of claim also allege that, prior to Mr and Mrs Murphy entering into the Lease, and continuing up to 30 March 1994, Overton failed to advise Mr and Mrs Murphy of some thirteen different matters (“the Relevant Matters”). The allegation is made that, in reliance upon the Original Representations and by reason of the failure of Overton to inform Mr and Mrs Murphy of the Relevant Matters:
· Mr and Mrs Murphy entered into the Lease;
· Mr and Mrs Murphy continued to believe in the correctness of each of the Original Representations up to 27 November 1996.
The statements of claim also allege that on 31 March 1994 Overton informed Mr and Mrs Murphy that Overton could have recovered contributions from residents in respect of the year ended 30 June 1993 in the sum of $1,018,548 but had decided to limit its recovery of outgoings in that period to $453,131 (“the March Representation”).
The statements of claim then allege that from 31 March 1994 to 1 July 1994 Overton made three further representations to Mr and Mrs Murphy (“the Further Representations”) as follows:
· If the Lessees increased the amount of their monthly contributions by 18.37 per cent then the amount of monthly contributions should be sufficient to reimburse Overton fully for all outgoings recoverable under their respective leases for the financial years ending 30 June 1994 and 30 June 1995;
· The payment by each of the Lessees of any increase in monthly levies of 18.37 per cent should be sufficient to ensure the commercial viability of the Heritage Village and thus preserve the value of the capital investment of each of the Lessees;
· The 18.37 per cent increase comprised 8.9 per cent by way of CPI increases over and above the amounts already paid since the commencement of the operation of the Heritage Village and 9.47 per cent by way of additional contributions required to ensure that Overton was fully reimbursed for all outgoings recoverable from Lessees for the financial years ending 30 June 1994 and 30 June 1995;
The Statements of claim allege that throughout the period 30 March 1994 to 27 November 1996 Overton failed to inform Mr and Mrs Murphy of any of the Relevant Matters. It is then alleged that in reliance upon each of the Original Representations, the March Representation and the Further Representations and by reason of the failure by Overton to inform Mr and Mrs Murphy of any of the Relevant Matters, Mr and Mrs Murphy:
· formed the view that any assertion by Overton that it could have recovered $1,018,548 from lessees was no more than a reference to the total expenditure of Overton during the relevant period;
· continued to believe in the correctness of each of the Original Representations;
· paid an increased monthly levy for outgoings from 1 July 1994 to 28 February 1997; and
· took no steps to surrender the Lease at a time when the value of the Lease was no less than that which Mr and Mrs Murphy had paid for it on 20 October 1992.
In addition it is alleged that, in reliance on the Original Representations and failure to inform Mr and Mrs Murphy of the Relevant Matters, Mr and Mrs Murphy made assumptions in the terms of the Original Representations. It is then alleged that, in the circumstances, it would be unconscionable for Overton to recover outgoings under the Lease in so far as they exceed the amounts which Mr and Mrs Murphy assumed they would be liable to pay and that Overton is therefore estopped from recovering outgoings under the Lease in so far as they exceed the amounts that Mr and Mrs Murphy assumed they would be liable to pay:
· for the duration of the Lease; or
· until reasonable notice was given of any substantial change in the level of outgoings.
Next, it is alleged that, by reason of the matters referred to above, it would be unconscionable for Overton to recover amounts by way of contribution to outgoings under the Lease in excess of the sum of $71.95 per week. It is also alleged that the conduct referred to would constitute a contravention of section 51AA of the Trade Practices Act. Section 51AA prohibits unconscionable conduct.
Finally, it is alleged that in making the Original Representations, Overton gave advice to Mr and Mrs Murphy in circumstances where Overton owed a duty to Mr and Mrs Murphy to exercise due care, skill and diligence when giving such advice. It is alleged that Overton breached its duty of care in giving advice by failing to inform Mr and Mrs Murphy of the matters referred to above.
Thus, while several diverse causes of action are relied upon, all causes of action arise out of the same factual circumstances. Those circumstances are the alleged representations and failure to inform Mr and Mrs Murphy of the Relevant Matters during the period 27 May 1992 to 27 November 1996. In the course of addresses, after the close of the evidence, it was accepted on behalf of Mr and Mrs Murphy that, of the Original Representations, only the following are of relevance:
· Substantially all outgoings incurred by Overton in the retirement of the operation of the Heritage Village for which Mr and Mrs Murphy were liable under the Lease, at the time the Information Booklet (as referred to below) was provided by Overton to Mr and Mrs Murphy, had been incorporated into the estimate in the Information Booklet;
· The quantum of future total outgoings would be limited to the Estimated Initial Outgoings in Schedule 6 of the Lease plus such increases in costs which were fairly and/or reasonably based on the outgoings comprised in the said estimated initial outgoings;
· The quantum of future total outgoings would be limited to the estimate set out in the Information Booklet plus such increases in costs which were fairly and/or reasonably based on the outgoings;
· Future increases in outgoings would be limited to ensure that if either Mr Murphy or Mrs Murphy passed away, the survivor on a single full age pension would always throughout the term of the Lease be able to afford to pay all outgoings for which the survivor was liable without recourse to depleting the assets of the survivor;
· So as to ensure that a resident on a single full pension would always throughout the term of the Lease be able to afford to pay all outgoings for which such resident was liable without recourse to depleting the assets of the resident, regard would be given by Overton when incurring future increases in outgoings to increases in the Consumer Price Index (“CPI”);
It was also accepted that the only relevant assumptions for the purpose of any estoppel were assumptions in the terms of those representations.
Of the Relevant Matters, only the following are relied on by Mr and Mrs Murphy as having relevance:
· At all times it was open to Overton to substantially increase the level of outgoings under the Lease without regard to the basis upon which any of “the estimates” had been calculated;
· At all times it was open to Overton to so increase future outgoings recoverable under the Lease that Lessees on a single full age pension would not be able to afford to pay all outgoings for which they were liable without recourse to depleting their assets;
· At all times it was open to Overton under the Lease to recover all outgoings incurred for such levels of expenditure as Overton in its sole discretion saw fit to incur;
· The level of outgoings levied by Overton from individual residents under their respective leases could increase so substantially that the value of the leasehold interest being acquired by Mr and Mrs Murphy under the Lease would be significantly diminished;
· Mr and Mrs Murphy would lose the ability to readily procure a replacement lessee and to surrender the Lease without sustaining a substantial loss on the Lease Deposit (as referred to below) if Overton saw fit to levy all outgoings that it was entitled to recover under the Lease;
· Overton was entitled under the Lease to recover losses from the provision of user pay services from Mr and Mrs Murphy;
The Original Representations are alleged to have been made partly expressly and partly by implication. In so far as they were made expressly, they are alleged to have been made orally by Mrs Patti Taylor, who was the managing director of Overton. The implication is said to arise from the following circumstances:
· Overton welcomed as residents persons in receipt of full pensions and was aware that the income of such persons was fixed such that they would be unable to finance contributions that increased over and above the sum that a resident on a full aged pension would be able to afford to pay;
· Overton was aware that Mr and Mrs Murphy were in receipt of the full aged pension and that their income would be fixed for the duration of the Lease, that increases in maintenance fees in excess of the estimate given to them would make it extremely difficult for Mr and Mrs Murphy to meet their obligations under the Lease and that Mr and Mrs Murphy were concerned about whether, as pensioners, they could afford to live at the Heritage Village;
· Mr Murphy had enquired of Overton as to the affordability of the Lease for a person who was only in receipt of a single full aged pension.
The Further Representations are alleged to have been made orally by Ms Julie Hough of Pannell Kerr Forster, Overton’s accountants and by Mr John James, who replaced Mrs Patti Taylor as managing director of Overton. The third of the Further Representations is also alleged to have been made by writing included in papers furnished to Mr and Mrs Murphy in connection with a meeting of Lessees held on 31 March 1994.
THE LEGAL STRUCTURE OF UNITS IN THE HERITAGE VILLAGE
In order to further the promotion of the Heritage Village, Overton entered into a deed of trust dated 31 December 1985 (“the Trust Deed”) with Perpetual Trustee Company Limited (“Perpetual”). The intention of the Trust Deed was expressed in recital G to be as follows:
“that certain benefits and obligations to the extent provided for herein, shall extend to every person who applies to lease a Unit from [Overton] under this Deed for such time and for so long as that person remains a Lessee and every unit shall be leased and held subject to the provisions of this Deed.”
The trust created by the Trust Deed was to be known as “The Heritage Retirement Village Trust”. It is desirable to say something about the structure of the arrangements intended to be entered into between Overton and the Lessees as provided for in the Trust Deed. The arrangements were described in some detail in a “General Information Booklet” dated 1 July 1991 issued by Overton to Lessees (“the Information Booklet”). A copy of the Information Booklet was furnished to Mr and Mrs Murphy in circumstances I shall describe below.
The Trust Deed requires that leases to Lessees be in a specified form. Thus, memorandum Y452314 (“the Lease Memorandum”), which had been filed in the Office of the Registrar General on 27 July 1989, was incorporated by reference into the Lease and to other leases granted to Lessees. The Lease Memorandum contains, inter alia, provisions dealing with Rent, Lease Deposits and Surrender of leases. The relevant provisions are set out in Appendix 3. The Trust Deed also dealt with the Lease Price in clauses 10 to 15 inclusive. The terms of those clauses are set out in Appendix 4.
The net effect of those provisions of the Trust Deed and the Lease Memorandum is as follows:
· A Lessee pays a total consideration, being the Lease Price, for the grant of a lease.
· Total Rent is 25 per cent of the consideration paid for such lease.
· The Lease Deposit is 75 per cent of that consideration.
· Overton is entitled to appropriate 10 per cent of the Total Rent every six months until, after five years, the Total Rent has been fully appropriated.
· After five years, no further rent is payable by a Lessee.
· Perpetual advances to Overton, by way of interest free loan, 97.5 per cent of the Lease Deposit paid by each Lessee.
· In the event of surrender of a lease, the Lessee will receive one-half of the excess, if any, of the Lease Price paid by any new Lessee for the grant of a new lease of the outgoing Lessee’s unit, over the Lease Price originally paid by the outgoing Lessee.
· If the original Lease Price does not exceed the Lease Price payable by the incoming lessee, the outgoing Lessee would receive a refund of the Lease Deposit plus any unappropriated amount of the Total Rent.
CONTRIBUTIONS TO OUTGOINGS BY LESSEES
The Lease Memorandum and the Trust Deed also provide for the operation of the Heritage Village by Overton. The Trust Deed contains covenants by Perpetual with Overton and Lessees and covenants by Overton with Perpetual and Lessees. The Trust Deed also provides for the powers and duties of Overton as managers of the Heritage Village. Relevantly, clauses 21 and 22 of the Trust Deed provide as follows:
“21.The Manager covenants with the Lessees for the benefit of each of them jointly and severally that it will:
(1)use its best endeavours to carry on and conduct the Village, the marketing of it and its business in a proper and efficient manner and to ensure that any undertaking scheme or enterprise to which this Deed relates is carried on and conducted in a proper and efficient manner.
………………………
(3)keep all parts of the Village which shall be of a repairable nature in proper repair, order and condition and maintain the same in reasonable working order and efficiency and not pull down, remove or injure any part of the same (except in the ordinary course of business or pursuant to any lawful requirement or with any other reasonable justification) without restoring or replacing the same;
………………………
(7)duly comply with all requirements of all proper and competent authorities having jurisdiction over the Village including without limitation ensuring that all valid notices and requirements of such authorities in relation thereto are observed and complied with.
22.(1) …the Manager shall have the full and complete rights powers and interests as are conferred upon it or possessed by it by reason of its right title power and interests in the Village, the Agreements for Lease, the Leases and the Development Consent provided that the Manager shall exercise same and shall carry out and perform its duties obligations and functions in good faith and in such manner as shall not substantially reduce or limit the rights and interests conferred upon the Lessees jointly or severally.
………………………
(2)The Manager may pay outgoings from its own funds but shall be entitled to claim reimbursement of all amounts so paid…from the Lessees by the inclusion of such amounts in the next succeeding contribution by the Lessee’s (sic) to Outgoings.”
The Lease Memorandum provides the mechanism for the recovery by Overton from Lessees of contributions to the expenditure incurred in operating the Heritage Village. Clause 5 of the Lease Memorandum relevantly provides as follows:
“1. INTERPRETATION
………………………
“Outgoings” … means the outgoings and expenses levied in respect of the Village in accordance with Clause 5 of this Lease.
………………………
“Premises” means the premises described in Item (1) of the Reference Schedule…
………………………
5. CONTRIBUTION TO OUTGOINGS
(a)In addition to paying the Lease Price, the Lessee shall… contribute to the Outgoings… in respect of the Premises and the Village and facilities thereof in accordance with this Clause.
(b)The Lessor may from time to time notify the Lessee of the Lessor’s current estimate of the Lessee’s contribution to the Outgoings… in respect of the Premises and the Village and facilities thereof in relation to any particular period… and the Lessee shall thereupon make payment of the amount of such estimated contribution either monthly or at such other intervals and on such dates and in such amounts as the Lessor shall determine. As soon as practicable after the end of each period in respect to which contribution has been levied, an adjustment shall be made between the Lessor and the Lessee by the payment of any deficiency in the amount of such contribution actually paid by the Lessee to the Lessor or the crediting of any excess by the Lessor against any future such contribution…
………………………
(f)(i)A Lessee’s contribution to the Outgoings… shall be levied in respect of each Unit in the Village and shall be determined as follows:
(1)(As regards Floor Area Outgoings) by determining that proportion of the Outgoings… as the floor area of the Premises is a proportion of the total floor area of the Village…
(2) (As regards Per Unit Outgoings) by determining that proportion of the Outgoings… which is equivalent to a fraction determined in accordance with the following formula:
Where:
P = the proportion of Outgoings… payable by the Lessee in accordance with this Clause; and
N = the number of Units within the Village.
…………………………
(g)In addition to the Outgoings… in this Clause, the Lessor may require the Lessee to pay and discharge and to keep the Lessor indemnified against all other outgoings, charges and liabilities for which the Lessor shall determine the Lessee to be separately liable in respect of the Premises…
(h)Any contribution in respect of Outgoings levied by the Lessor under this clause shall become due and payable to the Lessor or as the Lessor may direct in writing within seven (7) days of receipt of notice of the levy…
………………………
(l)The Lessor estimates that the initial contribution which the Lessee will be called upon to pay will be the amount shown in Item (6) of the Reference Schedule. Such amount constitutes an estimate only and is subject to determination and variation from time to time in accordance with this Clause.”
In practice, Overton prepared a budget of estimated expenditure for each year and calculated the contributions necessary from Lessees on the basis of that budget. The contributions so calculated were the maintenance fees that Lessees were required to pay on a weekly or monthly basis. At the end of the period, Overton’s auditors would prepare an account of the expenditure actually incurred in operating the Heritage Village and the income from contributions and operation of the Heritage Village. That income and expenditure were referred to as “the Maintenance Fund”.
LAY WITNESSES
Mr Murphy gave evidence. His evidence was given partly by affidavit and partly orally. Affidavits were originally filed in which Mr Murphy deposed to the negotiations that led to the grant of the Lease by Overton. In particular, Mr Murphy dealt with conversations said to have taken place between himself and his wife on the one hand and Mrs Patti Taylor, who was then managing director of Overton, on the other hand. However, the passages in the affidavits dealing with those conversations were not read and those matters were the subject of viva voce evidence from Mr Murphy. Mr Murphy also gave viva voce evidence concerning his reliance on statements alleged to have been made by Mrs Taylor and on documents furnished to him by Overton, by way of inducement to enter into the Lease.
When Mr and Mrs Murphy entered into the Lease on 20 October 1992, Mr Murphy was 71 years of age and Mrs Murphy was 69 years of age. Mr Murphy left school at the age of 14, having completed two years of secondary education. From the age of 14 to the age of 63 he was employed by various engineering firms as a tool maker. Mrs Murphy also left school at the age of 14 and worked as a greengrocer’s assistant and as a hosiery repairer until she was 19 years of age. She and Mr Murphy married when she was 19 and she has not worked since that time.
Since Mrs Murphy is no longer capable of giving evidence, Mr Murphy also gave evidence concerning discussions that he had with Mrs Murphy concerning the materials furnished to them by Overton. These discussions may have a bearing on Mrs Murphy’s reliance on that material by way of inducement for her to enter into the Lease. Any conclusion as to her state of mind at any relevant time must depend upon inferences to be drawn from the objective facts in evidence.
Mr Murphy created the impression of being careful and meticulous. His recollection of figures and of discussions that took place more than 7 years ago appears remarkably clear. I perceived nothing about his demeanour in the witness box and his manner of giving oral evidence to suggest that he should not be believed in what he says in his affidavit and in the witness box as to conversations that took place with Mrs Taylor.
Mrs Kathleen Edith Hyslop, a daughter of Mr and Mrs Murphy, also gave evidence concerning conversations that she had with her mother, independently of Mr Murphy. Such conversations may be relevant to the question of Mrs Murphy’s reliance on representations allegedly made on behalf of Overton. I perceived no reason to doubt that Mrs Hyslop recounted accurately the substance of the conversations that she had with her mother.
Mr John James, the present managing director of Overton, also gave evidence both by affidavit and orally. Mr James’ recollection of facts upon which he was questioned was not good. He was unable to give reliable evidence about relevant events. For that reason, to the extent that there is any conflict between the evidence of Mr Murphy and that of Mr James, I would prefer the former.
Mrs Taylor died shortly before the Lease was signed. Overton has not sought to dispute Mr Murphy’s evidence as to his conversations with Mrs Taylor.
THE NEGOTIATION OF THE LEASE
In May 1992, Mrs Murphy was diagnosed as suffering from a disease commonly known as Steele Richardson Syndrome. Her medical advice was that her condition would slowly deteriorate. Mr and Mrs Murphy were advised that it would be desirable for them to move into a retirement village where it would be possible for Mrs Murphy to obtain the necessary support and care as and when she required it. Accordingly, they decided to sell their family home and move into other accommodation. They hoped at that time to sell their house for about $245,000.
In late May and early June 1992, Mr and Mrs Murphy visited a number of retirement villages, including the Heritage Village. On the first occasion that they went to the Heritage Village, they met Mrs Taylor, her son Peter, and a receptionist. Mr Murphy told Mrs Taylor that they had come to look over the Heritage Village as they were thinking of selling their home and moving into a retirement village. Mrs Taylor asked what sort of accommodation they were looking for and told them that the types of units available were units with a single bedroom, two bedrooms or a bedroom and study. Mr Murphy responded that he thought a unit comprising bedroom and study would be adequate.
Mr Murphy told Mrs Taylor of his wife’s medical condition and Mrs Taylor said that she would have to see the doctors that attend at the Heritage Village in case Mrs Murphy would be an excessive burden on the personal care staff. Mr Murphy also said to Mrs Taylor that they were both on a full pension and that they were looking to see what accommodation they could get and what they could afford. Mrs Taylor said that they had a number of pensioners there and that Mr and Mrs Murphy “should be able to afford to live” at the Heritage Village on the pension.
Mrs Taylor also said that Overton was a family business and that they would be involved with the running of the Heritage Village full time. She said that while Overton had more units to build, the fees would be the same as they were then, once the Heritage Village was completed and all the units were complete.
Mrs Taylor showed Mr and Mrs Murphy the facilities in the main building and the public areas. She also showed them two units. She indicated that the price of one was approximately $195,000 and that the price of the other was roughly $215,000. She said that once they moved in, the maintenance fees that were set would cover everything and that they would have no more worries because Overton “do it all”. In response to an enquiry from Mr Murphy, Mrs Taylor said that the maintenance fee for a unit with one bedroom and study would be $55.71 a week.
Prior to 17 June 1992 Mrs Taylor telephoned Mr Murphy and said that the doctors had cleared Mrs Murphy and that she would not be a burden on the personal care staff. Mr and Mrs Murphy then visited the Heritage Village again on 17 June 1992, accompanied by their daughter Kathleen, her husband and her husband’s mother and stepfather.
When Mr and Mrs Murphy and accompanying family members saw Mrs Taylor on 17 June 1992, she asked what Mr and Mrs Murphy’s position was and whether they had their house on the market. Mr Murphy said that they had not yet put their house on the market although he had seen a real estate agent who had given them a price that the agent considered they could get for the house.
Mrs Taylor then said that if Mr and Mrs Murphy paid a deposit of $1,000 at that time, she would hold a unit for them for three months, provided they put their house on the market straight away and kept in touch with her. Mr Murphy said he did not know whether they could afford the unit until they got a price for their house. He said that both he and his wife were very concerned as to whether they could afford to live in the Heritage Village and did not want to commit themselves to something they could not afford. He said that when one of them either passed away or went to a nursing home, the other would have to live on a single pension. Mrs Taylor said that that was no problem and that they had a lot of single pensioners there on a full pension. She said that Mr and Mrs Murphy “would be able to afford to live” there once they were able to pay the fee to come in. She said they would be able to live on a single pension till the day they die, with the same standard of living that they would now have.
Mrs Taylor said that the exact sum that they would have to pay for a lease was $215,750. She also said that Mr and Mrs Murphy would have to pay Overton's solicitors’ fees, registration and government taxes and stamp duty as well as their own solicitors’ and estate agent’s fees. She suggested that, when doing their calculations, they should allow approximately $10,000 for extras of that kind.
Mrs Taylor also said at this stage that the maintenance fees that would be payable by Mr and Mrs Murphy to Overton would cover everything, even supplying light globes. She said that the only things that Mr and Mrs Murphy would have to pay for themselves were telephone, electricity, household contents insurance and living expenses. Mrs Taylor then showed Mr and Mrs Murphy and the others Unit 53 as well as Unit 49, which was a single bedroom unit.
A week or two after the visit to the Heritage Village on 17 June 1992, Mr Murphy’s solicitors, Messrs Saville & Walkom, received from Overton’s solicitors copies of several documents, being:
· the Information Booklet;
· the Trust Deed;
· form of lease relating to Unit 53; and
· forecast operating budget of the Heritage Village for the period 1 July 1992 to 30 June 1993.
The form of lease received by Mr and Mrs Murphy consisted of a short form of lease which incorporated the provisions the Lease Memorandum. The form of lease contained an annexure described as “Reference Schedule” containing nine specific items. The Lease Memorandum contained general provisions making reference to items in the Reference Schedule.
Thus, in the Lease Memorandum, the term “Premises” was defined as meaning the premises described in item 1 of the Reference Schedule. Item 1 of the Reference Schedule attached to the Lease was as follows:
“All those premises known as Unit 53, Heritage Retirement Village.”
Item 4 in the Reference Schedule specified that the Total Rent was $53,937.50 and Item 5 specified that the Lease Deposit was $161,812.50. Those two sums added together comprise the Lease Price of $215,750. That is the consideration paid by Mr and Mrs Murphy to Overton for the grant of the Lease.
Item 6 in the Reference Schedule, headed “Estimated Initial Outgoings”, is as follows:
“Fifty Five Dollars and Seventy One Cents ($55.71) per week – Pensioner
Sixty Dollars and Seventy Nine Cents ($60.79) per week – Non-Pensioner.”The Information Booklet is a document of some 15 pages. It contains information under the following headings:
· The Company;
· The Development;
· Services and Facilities;
· Development Parameters;
· Ongoing Management and Maintenance Program;
· How the Heritage Lease and Trust Deed System Works;
· Outlay by Resident;
· Legal Tenure of Residents and Deferred Management Fees; and
· Questions You May Like Answered.
The material in the Information Booklet relevant to the present case was contained on pages 6, 7 and 8 and in questions and answers 7 and 8. An extract of the relevant material appears in Appendix 5.
The critical part of the material is a statement that “present budget figures would indicate” that the cost payable weekly in respect of a unit comprising one bedroom plus study would, for a pensioner, be $55.71.
Mr Murphy said that, following the second visit to the Heritage Village, he and his wife read the Information Booklet together and discussed its contents. Mr Murphy drew particular matters to Mrs Murphy’s attention. Thus, he raised with her the figure of $55.71 shown as the level of cost for a pensioner for a unit comprising one bedroom plus study. He added up what it was costing them at that time for insurance, council rates “and everything in the home”. It came to about $29 a week and mowing the lawns was costing another $29 a week without having to “repair the house or paint it or anything”. He considered that the figure of $55.71 per week was reasonable because they had had the house painted not long before and it cost nearly $3,500. They therefore believed that the cost of maintenance of $55.71 per week would be quite reasonable and that they could afford that if they had enough “to buy in”.
Mr Murphy also noticed that the answer to question 7 stated that the average weekly fee was $47.53 but remembered that Mrs Taylor had previously said that that was an average over all the various types of unit and that the maintenance fees for their proposed unit was $55.71. Mr Murphy also read those parts of the Information Booklet that set out the items that would be covered by the maintenance fees. He said that, when considering the Information Booklet, he remembered Mrs Taylor’s explanation of what Overton’s obligations were, namely, that Overton would pay for everything and that Mr and Mrs Murphy “would have no worry once we moved in”.
Mr and Mrs Murphy’s consideration of, and discussion concerning, the Information Booklet took place over a number of days. Mr Murphy said that the most important item that they considered was the affordability of the Heritage Village and the fact that Mrs Taylor had stated that pensioners could always afford to live there on the pension.
Mr Murphy also gave evidence concerning the other features of the Heritage Village and various other factors that made the Heritage Village attractive to him. For example, the location of Unit 53 was attractive because there was only a slight ramp to walk up to one step into the unit. It was easy walking to the amenities building, being the main centre. He said that the personal care availability was of significance to him.
Mr and Mrs Murphy began “to get feedback”, as Mr Murphy put it, concerning the possible sale of their home. By late August 1992 it was becoming apparent to them that they were going to get nowhere near $245,000 and would not get more than about $212,000 for their home. At that point Mr and Mrs Murphy began discussing again the question of buying a unit in the Heritage Village.
In the meantime, Mr and Mrs Murphy had given consideration to an alternative retirement village known as “John Paul Village”. They had apparently been placed on a waiting list and had been on the list for some three months by the end of August 1992. They understood that it was anywhere from 12 to 18 months before they would be offered accommodation in the John Paul Village. Mr Murphy said that once they realised that they would receive no more than $212,000 for their house, they decided that they could not afford a unit in the Heritage Village because they would not have enough money. They would therefore have to wait until a vacancy arose at the John Paul Village.
At “the very end of August”, Mr and Mrs Murphy went to see Mrs Taylor and told her that the price they were going to get for their home was only $212,000 and that they would have to cancel and wait to go to the John Paul Village. Mrs Taylor asked whether they could possibly get the extra money and asked how much extra they would need. Mr Murphy said that they would need roughly $10,000, depending on the figure that would be involved for incidental expenditure of $10,000 that had been mentioned earlier. There was also some discussion about a garage space. Mr Murphy said that what they were getting would not even pay for the unit, apart from solicitors’ fees and everything else “that will have to come”. He said that it would leave them with practically nothing so they would have to cancel. Mrs Taylor then said that if they could possibly borrow the money from one of their family, they could pay the extra “to come in” and then live there on a pension, even a single pension, until “the day you die”.
Mr Murphy said that there were “a few things in the papers” that he had read that he was a bit concerned about. He asked how accurate was the budget that he had been given showing a surplus of $22,000. Mrs Taylor said that her son had just sent the balance sheet for 1991-92 to the auditors to be audited and that, while the budget had shown a surplus of $18,200, the surplus turned out to be $18,500 odd. She said that she expected the surplus of $22,000 for the 1992-93 budget to be conservative as there were going to be twelve more units finished in a month and the maintenance fees from them would “come on line straight away”. She said that she expected that the surplus would be more like $25,000 or $30,000. She said that they would have no worries in that respect.
Mr Murphy then asked Mrs Taylor about shortfalls and said that in the documents it said that if there is any shortfall they would have to pay it at the end of the year. He asked what had been the history of Overton “from day one”. Mrs Taylor said that there had been shortfalls in a few years but that Overton had paid those shortfalls and had not applied to the residents to recover it. She said that Overton’s policy was that they would pay all shortfalls until the full 160 units proposed in the development were finished. She said that she expected the full 160 units to be completed in two years time. Mrs Taylor said that the fees would then come down. She said that she would have to call a meeting of the residents to ask them whether they want the fees brought down immediately, or whether they preferred to leave them as they were for a couple of years, to build up a sinking fund for carpeting and repainting and then have another meeting to decide what to do from then on. Mrs Taylor said that after that, any rises would only be in line with the CPI and “you will always be able to afford it”.
Mrs Taylor asked Mr and Mrs Murphy “to think about it”. Mr Murphy said that he could not give her an answer then because he did not think any of their family could help them but that he would see what he could do about it and let her know. The conversation ended with Mrs Taylor saying that she would drop the price of Unit 53 by $5,000 and would drop the price of a garage by $5,000 so that they could have both for the sum of $215,750.
At that time, Mr Murphy had an investment with Mirvac Property Trust of approximately $8,500. The investment was “frozen through the Estate Mortgage collapse”. Shortly after the discussion with Mrs Taylor in late August 1992, Mr Murphy telephoned Mirvac and he was told that he could have the money from the Mirvac Property Trust at the ruling price at that time, by producing appropriate medical evidence in respect of Mrs Murphy’s condition.
At that time, Mr and Mrs Murphy also owned assets consisting of term deposits of $9,000, a pensioner savings account of $7,500 and a loan made to one of their daughters of $7,000. Mr and Mrs Murphy decided that with the sum of $8,500 from the realisation of their investment with Mirvac Property Trust they “could just manage the price and fees” required to enable them to enter into a lease from Overton. Mr Murphy said that he and Mrs Murphy concluded that they “would manage OK and still be able to have two trips away each year… and also have some weekends away”, on the basis that $55.71 was an accurate estimate of the fees payable, that future increases would be no greater than CPI and that persons in receipt of the full aged pension could afford to remain at the Heritage Village until they died.
At the meeting in late August 1992, Mr Murphy also raised with Mrs Taylor a matter of concern to his solicitor, namely whether the Heritage Village was fully insured and their equity was covered. He was also concerned about rebuilding if the Heritage Village was destroyed by any means and whether they would “be paid out” if Overton did not rebuild. Mrs Taylor could not answer that question and said that she would ask Overton’s solicitors, since no one had asked that question before. She said that she realised that it was an important matter.
That question was taken up by Messrs Saville & Walkom in a letter of 7 September 1992 to Owen Hodge & Son, the solicitors then acting for Overton. In their letter, Saville & Walkom said that they had possession of the Lease Memorandum and the Trust Deed but they had not been provided with the Reference Schedule to which the Lease Memorandum refers. That suggests that the form of lease that had been sent with the Information Booklet did not contain a completed Reference Schedule.
As soon as he got word from the Mirvac Property Trust that his investment would be returned, Mr Murphy told Mrs Taylor that he and Mrs Murphy would be proceeding to enter into a lease. Mr Murphy said that in making that decision he and his wife “weighed up the pros and cons” and “relied entirely on the promises by Mrs Taylor that once having paid the lease price to come in we would never have any financial worries thereafter”.
When asked what led him to make the decision to enter into the Lease, Mr Murphy said:
“Well it was a decision that had to be made. We either cancel and wait for John Paul or we just agree that we have got sufficient money to buy in and we'll be able to live on that in the retirement village for the rest of our lives without being in financial difficulties and bearing in mind our financial position over the whole of our married life, we've always lived on the bread line and always managed. We felt confident that we'd be - on the promises that were made, we'd be able to continue to manage in the village at that - once we paid the price to go in.”
When asked what promises he was referring to he said:
“That the fees would always be held within the limits of the capability of a pension, single pensioner on a full pension to be able to afford…She did mention that the CPI and the pension always move together. So that’s why it would always be within the capability of a pensioner to stay there.”
Mr Murphy was also asked what were the matters that led him to make the decision to enter the Lease at the Heritage Village. His response was as follows:
“In the first place it was my wife’s health and as I have already said we considered that having cashed the, or arranged to cash the shares in that we could reach the 215,750 and pay the legal costs involved and be able to move into the village and we would then be able to continue to live with the same standard of living that we already had and enjoyed for the past 10 or 15 years.”
In addition, Mr Murphy was asked what information about the Heritage Village he took into account in making his decision to enter into the Lease. His response was as follows:
“The affordability was the key instrument in our decision that it has always been our major focus, the affordability of what we could do in our marriage and that has always been the subject of very very close examination and we relied on the words of Mrs Taylor that we would always be able to afford it and affordability was the major key in our decision… The fact that Mrs Taylor said that the next, the village would be completed in two years and she didn’t expect to have to put the fees up in `93/4. If so only by two or perhaps at a very maximum, $3 a week but at the end of the two years that the fees would come down unless the residents agreed to leave them at that level for a period to build up a sinking fund. So we expected that the figures that were being quoted were affordable and we would be able to afford it, so why not bite the bullet, as they often say, and say, yes, right, we’ll come into the Village.”
When asked whether there was any other information that Mr Murphy was given that led him to conclude that the Heritage Village was “affordable” he replied:
“The fact that there was so many single pensioners already living there…Our own experience of budgeting our own family life and our own home right up to that date.”
Mr Murphy also said that, besides “affordability”, the other information that he received in relation to the Heritage Village that he took into account to make his decision was as follows:
“The fact that it was a family business and it was an ongoing, with an ongoing interest in it and that they would always be involved with the Village and check it. And Mrs Taylor assured us that the things that she was promising us then would always be there.”
Mr Murphy did not instruct Saville & Walkom at any time that it was his belief that some limitation or limit was to be imposed upon the outgoings that were to be paid. Mr and Mrs Murphy had meetings with Saville & Walkom on 1 October 1992, 8 October 1992 and, finally, 20 October 1992, when they actually signed the Lease. During the course of those meetings Mr Murphy told his solicitor that Mrs Taylor had agreed that she would give Mr and Mrs Murphy a garage and Unit 53 for the one price. Nevertheless Mr and Mrs Murphy went ahead and signed the Lease, notwithstanding that it related only to Unit 53 and did not include a garage. They did not make any mention of Mrs Taylor’s statements about affordability.
When Mr and Mrs Murphy went into the Heritage Village to take up occupancy on 17 October 1992, Mr Murphy believed that the entitlements that he and his wife would enjoy, and the obligations that he and his wife would have, would be those entitlements and obligations set out in the Lease Memorandum, the Trust Deed and the Lease. In particular, Mr Murphy believed that the entitlement of Overton to charge maintenance fees was to be found wholly within the terms of the legal documents, including the Lease Memorandum.
In cross-examination, Mr Murphy’s attention was drawn to clause 5 of the Lease Memorandum, particularly clause 5(l). He said that he saw that provision and understood, when he signed the Lease, that the amount in Item 6 of the Reference Schedule, of $55.71 per week, constituted an estimate only and was subject to determination and variation from time to time in accordance with clause 5. He did not think that the estimated initial outgoings figure would never be changed. He well and truly understood, when he entered into the Lease, that that figure might be varied from time to time by Overton, provided that Overton varied the figure in accordance with clause 5 and nothing else. It was important to Mr Murphy that Overton would not be allowed to increase it to whatever figure it liked. It was important, for Mr Murphy’s purpose, to have the security of a legal instrument to set out just what the rights were of each party to any “deal” that he was going into.
Mr Murphy said that he believed, as at 17 October 1992, that all the terms set out in the Lease Memorandum applied to him “with an explanation”. The explanation was that he had asked Mrs Taylor what was the situation with “the surplus that was shown in the budget we had of $22,000”. He said that Mrs Taylor considered that figure to be conservative “on account of 12 more units coming on line”. Further, Mr Murphy had in mind that he had asked Mrs Taylor about the shortfalls that could be charged and was told that there had been shortfalls a few times in the history of Overton but that Overton’s policy was that they would pay all shortfalls until such time as the 160 units were complete. Mr Murphy said that Mrs Taylor “firmly believed that then the fees would be able to come down and they would only then rise by the CPI from that time on”.
Mr Murphy had been concerned to go through the Lease Memorandum very carefully because he understood that the Lease Memorandum was the legal document that set out, on the one hand, entitlements that he would come to enjoy if he were to proceed and, on the other hand, obligations that he would incur if he were to proceed. He went through the Lease Memorandum with particular care to ensure that he understood what was in it. In particular, he read the Lease Memorandum to ensure that he understood what it was that he might have to pay. He noticed the rent provisions and the outgoings provisions. Where he felt the need to seek clarification about any question, he contacted his solicitor and sought advice.
Mr Murphy had a clear belief that it was the series of provisions set out in clause 5 that would govern what money he and his wife would have to pay by way of contribution to outgoings during the term of the Lease. He believed at the time of signing the Lease that the Lease Memorandum would govern his obligations in relation to outgoings for many years to come
Mr Murphy understood, when he signed the Lease, that the estimated initial outgoing figure of $55.71 was to be subject to the provisions of the Lease Memorandum and believed that it was subject to determination and variation from time to time. However, Mr Murphy explained that his belief was subject to the assurance that he said Mrs Taylor had given him and Mrs Murphy that they could live in the Heritage Village on a single pension for the rest of their lives. He said that he believed that there was a limit on the amount of any variation that might be imposed pursuant to clause 5 of the memorandum. He said that the limit was:
“The fact that Mrs Taylor had said, once the Village was complete and the fees were adjusted at that time, they would never go up more than the CPI from then on.”
When asked whether it was important for his purposes to put to one side all of the sales talk that he had received over the months so that he could focus on precisely what it was that he was getting and precisely what it was that he would have to be paying, Mr Murphy said that he did not “exactly understand that Overton could and would increase the prices beyond what I had already been promised”. He did not believe, as of 20 October 1992, that the only outgoings that he and his wife would ever have to pay would be limited to $55.71 per week. However, he said that he believed that the contribution to outgoings that he and his wife would be obliged to pay would be limited to a sum that would enable a single pensioner to live in the Heritage Village for the rest of his or her life on a full single pension.
He did not believe that liability to contribute to outgoings would be limited to a particular dollar amount. Rather, it was always his clear understanding that liability to contribute to outgoings was a liability to contribute to an amount that may from time to time vary whether it be up or down. Mr Murphy had in his mind at the time when he signed the Lease, that if $55.71 were to change, it would only be by $2 or a maximum of $3 a week and that in two years the Heritage Village would be completed and then the fees would come down “possibly even below the $55.71”.
As at 20 October 1992, Mr Murphy believed that the Heritage Village was planned to be self-funding from the residents. He understood that nobody would be subsidising the Heritage Village and that it would have a set of accounts and a budget of its own. Contributions would be made and the contributions would by paying for whatever needed to be paid for “as the Village rolled along”. However, he asserted that his belief was that, when he signed the Lease, a contribution to outgoings would stay within the capability of the pension “which is governed by the CPI”. Nevertheless, he acknowledged that the CPI concept, as he understood it, was only ever applicable to the situation that would apply after the whole of the Heritage Village was finished. He also accepted that the Heritage Village has not been completed as at the present time.
MR MURPHY’S UNDERSTANDING AS AT 20 OCTOBER 1992
It is difficult to reconcile Mr Murphy’s asserted belief that Overton had, through Mrs Taylor, made some promise about the level of maintenance fees with his evidence that he read and understood the provisions of the Trust Deed and the Lease Memorandum and believed that that documentation set out his and Mrs Murphy’s rights and obligations in relation to the Heritage Village.
I am satisfied that he believed and understood that his and Mrs Murphy’s obligations and liabilities were as specified in the legal documentation. On the other hand, he had a belief or expectation, induced by Overton’s conduct, that in the ordinary course of things, the maintenance fees that he or Mrs Murphy would be called on to pay would not increase disproportionately to increases in the age pension. Mrs Murphy’s state of mind was not relevantly different. Their belief and expectation was a factor that they took into account in deciding to enter into the Lease.
OVERTON’S CHANGE OF APPROACH
It is also necessary to consider Overton’s conduct during and after 1994. That conduct is alleged to give rise to estoppels and to an independent cause of action under the Trade Practices Act. It is convenient to deal separately with different stages during 1994 and thereafter.
The March Documentation
On 11 February 1994 a general meeting of the residents of the Heritage Village was convened to be held on 9 March 1994. The notice indicated that the proposed agenda included consideration of the actual accounts of the Maintenance Fund for the period ended 30 June 1993 and a draft operating budget for the period ending 30 June 1994.
On the morning of 8 March 1994, Mr Murphy received a bundle of documents under cover of a letter from Overton addressed to each Lessee and dated 8 March 1994. The documents included notice of a meeting of Lessees to be held on 30 March 1994. Also included in the bundle of documents were the following:
· copy of the operating budget for the 12 months ended 30 June 1993, which had been approved in 1992;
· report dated 17 December 1993 from Pannell Kerr Forster, relating to the Maintenance Fund for the year ended 30 June 1993;
· an analysis of the variation of the actual incomes and expenditures of the Maintenance Fund as compared to the approved operating budget in respect of the Maintenance Fund for the periods ended 30 June 1991, 30 June 1992 and 30 June 1993;
· forecast operating budget for the period ending 30 June 1994;
· spreadsheet analysis of the actual incomes and expenditure of the Maintenance Fund for the years ended 30 June 1988 to 30 June 1993 inclusive. The spreadsheet also contained the figures from the forecast operating budget for the period ending 30 June 1994 together with variations between the actual account for the period ending 30 June 1993 and the budget for the period ending 30 June 1994;
· Consumer Price Index Historical Series 2, showing changes up to and including the December 1993 quarter;
· spreadsheet analysis of the effect of movements in the CPI on contributions to outgoings and Maintenance Fund revenues for the years 1988 to 1994 inclusive;
· Ready Reckoner of the effect of theoretical adjustments on the levy of contributions outgoings to compensate for movements in the CPI for the periods ending 30 June 1988 to 30 June 1994 inclusive.
The Ready Reckoner included two tables showing the effect of increases in contributions under the following headings:
“1/07/93–30/06/94 INCREASED TO MATCH CPI…Increase 01-Jul-93…8.90% C.P.I. Adjustment
01/07/93 – 30/06/94…INCREASED TO BREAK EVEN Increase 01-Jul-93…18.37%… 8.09% C.P.I. Adjustment… 9.47% Deficit Adjustment”
It is significant that the Ready Reckoner foreshadowed an increase of 9.47 per cent in excess of the increase in the CPI. Mr Murphy gave no evidence of or attaching any particular significance to those figures at the time, although he said that he read the document he received on 8 March 1994.
The meeting convened for 9 March 1994 was held as proposed. Minutes of the meeting record that financial material had been given to each of the Lessees on the previous day and that the meeting originally convened for 30 March 1994 was to be held on 31 March 1994.
On 10 March 1994, the secretary of the Heritage Village Residents’ Committee wrote to Mr James recording that, at the meeting held on 9 March 1994, it had been decided to thank him “for the very comprehensive amount of material on our Maintenance Schedules ever given to us”. The letter went on to say: “For the first time in many aspects we had some real information to examine. Your approach certainly strengthens resident/management relations.” Mr. James responded on 17 March 1994 acknowledging “the kind sentiments expressed” in the letter of 10 March 1994. The cordiality of that exchange was to be shattered in the weeks and months that followed.
Shortly after 10 March 1994, Mr James received a letter from Pannell Kerr Forster dated 10 March 1994 relating to accounting for the Maintenance Fund. The letter records a request from Mr James, on behalf of Overton, to comment both on the items that “may” be included in the expenditure of the Maintenance Fund and also on the items “which reasonably should be met by” the Maintenance Fund. The letter of 10 March 1994 commences by saying:
“At this point it must be made clear that we have not sought legal interpretation of the Lease, but looked at the terms used in an accounting/ commercial sense only.
It is also fair to comment that the terms of the Lease are very widely drafted and therefore open to interpretation and because of this we have employed an overall attitude of ‘reasonability’ in our response. We believe this takes into account both spirit of the Lease and the underlying circumstances influencing the operation of the [Maintenance Fund].”
Enclosed with the letter it was a spreadsheet described as a “model” showing total outgoings for Overton for the year ended 30 June 1993 of $4,232,791. The model is entitled “Dissection of cash outflows and application of Funds for the year ended 30 June 1993.” It is divided into two sections. The first section consists of a list of expenses under the heading “Profit and Loss classification of expenses.” The expenses are divided under the following headings:
General Maintenance Total
$756,900 $490,107 $1,247,007Building Letting Operating Amberleigh Total
$56,547 $2,074 $979,243 $3,800 $1,247,007The top three figures appear to represent the actual allocation of expenses in Overton’s statutory accounts for the year ended 30 June 1993. The figure of $490,107 under the heading “Maintenance” represents the expenses actually allocated to the Maintenance Fund for the period out of total expenses of $1,247,007. The four figures under the headings “Building, Letting, Operating and Amberleigh” appear to represent a suggested re-allocation of the total expenses of $1,247,007.
The second section of the model contains a table described as “Balance Sheet Application of Funds”. It shows the following figures:
Total increase in assets $2,458,152
Total decrease in liabilities $527,632
Total application of Funds $2,985,784The figure of $2,985,784 is then allocated to activities of Overton as follows:
BUILDING LETTING OPERATING AMBERLEIGH TOTAL
$2,120,589 $53,878 39,305 $288,012 $2,985,784
There is then a total of outgoings allocated to activities as follows:
BUILDING LETTING OPERATING AMBERLEIGH TOTAL
$2,177,136 $745,296 $1,018548 $291,812 $4,232,791
The figure of $1,08548 referred to in the letter of 10 March 1994 thus represents the sum of the figures shown in the model allocated to “operating” activities as follows:
Expenses $979,243
Total application of funds $39,305
Total outgoings allocated $1,018,548The figure of $1,018,548 assumed significance in the ensuing weeks and months.
The letter of 10 March 1994 went on to say:
“Depending on where one draws the line as to ‘expenditure incurred in carrying on the operation of the Village’, on the basis of the attached model outgoings incurred and subject to recovery from the residents could have ranged anywhere between the $0 and $3,940,980.
Adopting the attitude of reasonability and eliminating building and letting activities and Amberleigh we suggest $1,018,548 could have been subject to contributions by residents providing all expenditure was necessary and reasonable and as a consequence of operating a first class village………
We do note however, that in respect of 1993 year the Lessor adopted a far more moderate approach in levying residents’ contributions. This was probably due to the continuation of policies adopted by previous management.
Commercially speaking however, to continue with this approach would be undesirable to the financial position of the Company. Attention to the establishment of a formula for regular increases in contributions on the basis of comprehensive forward projections for the fund should therefore be a matter of priority, and we understand this is currently being reviewed.”
On the morning of 31 March 1994, Mr Murphy received another bundle of papers under cover of a letter dated 31 March 1994 from Overton addressed to Lessees. Included in the documents were the following:
· letter dated 16 March 1994 from the Heritage Retirement Village Residents’ Committee addressed to Overton headed “Recovery of Shortfall”;
· letter dated 30 March 1994 from Overton to the President of the Residents’ Committee responding to the letter of 16 March 1994;
· references to the documentation pertaining the matters contained in the letter of 16 March 1994;
· extracts from the Trust Deed and Lease pertaining to those matters including clauses 5 and 17 of the Lease Memorandum;
· letter of advice of 24 March 1994 from Overton’s solicitors;
· letter of advice of 29 March 1994 from Pannell Kerr Forster;
· letter dated 16 March 1994 from the Residents’ Committee to Overton headed “Recovery of Shortfall”;
· letter dated 30 March 1994 from Overton to the Residents’ Committee, responding to the letter of 16 March 1994.
Also included was a copy of the letter from Pannell Kerr Forster of 10 March 1994. However, in the copy included for Lessees the figures of $4,232,791 and $3,940,980 referred to above were blanked out. Also, the “model” was not attached to the copy included for Lessees.
The cover sheet with Overton’s letter of 31 March 1994 referred to an annual meeting of Lessees to be held at 2 p.m. on 31 March 1994. Mr Murphy did not have an opportunity of reading the documents that he received on the morning of 31 March 1994 prior to the commencement of the meeting convened for 2 p.m. on that day.
The meeting was in fact held at the time fixed on 31 March 1994. Besides many of the Lessees, Mr James, Ms Stephanie Crowhurst, the administrator of the Heritage Village, Ms Julie Hough, an accountant from Pannell Kerr Forster and Ms Kerry Rendell, an assistant administrator or office worker employed by Overton, were also present. Ms Rendell recorded the proceedings.
The discussion at the meeting centred around the material contained in the two bundles of documents that I have described above. It is desirable, therefore, to say something more about certain of those documents before dealing with the proceedings at the meeting.
The budget for the year ended 30 June 1993 had provided for maintenance fees and other income to equate to the total outgoings of $452,000. The actual accounts for the Maintenance Fund for that period showed an operating profit of $6,075. That figure had been arrived at after crediting Overton’s contribution of $43,052 in respect of units not yet occupied. Those accounts, however, also showed that accumulated losses from previous years in the sum of $82,881 had been carried forward, giving accumulated losses at 30 June 1993 of $76,806.
The budget for the period ending 30 June 1994 showed total income of $479,000 as against total outgoings of $567,080. Thus a deficit of $88,080 was projected. In order to avoid that deficit it would be necessary for income from maintenance fees to be increased.
The letter from the Resident’s Committee of 16 March 1994 contained, inter alia, the following:
“1.In all discussions with Overton Investments management since the inception of the Village, and in written information received by Lessees in regard to financial information, there has never been any mention made of any shortfall, or accumulating shortfall, that Management expects to recover from Lessees.
2.The first intimation of any intention to recover a claimed shortfall was contained in the information on the actual income/expenditure and other financial details covering the whole period from inception, received for the first time by the Advisory Committee on 11.2.94, and by Lessees generally on 8.3.94.
………………………
6.…it is apparent that Overton Investments intended to, and should meet all shortfalls in accordance with the verbal and written undertakings they have given to Lessees as specified above.
Further to that, possibly the greatest selling point, and one which has played a big part in encouraging most of our present occupants to change their lifestyle and enter the Village was the often expressed fact that the Overton family had seen fit to create and establish the Village, both in the self care and later the Lodge areas, in a manner and to a standard that was befitting for their own mother (and grandmother) to live in, and were prepared to contribute towards establishing such a situation.
Both of these factors have resulted in a very relaxed and happy atmosphere generally, free from worry, having been created, which is an extremely valuable asset from both the Management and Residents point of view.
Disturbance of this atmosphere by a departure from the understood undertakings should be avoided as much as possible in the interests of all parties involved.
………………………
8.Our position is therefore that we do not agree that any shortfalls recoverable from Lessees in fact exist.
In regard to the current year’s so called Budget, what the Lessees are being asked to agree to is expenditure for the period from 1.7.93 until now, in regard to which they have never been consulted or advised, and which has then been extrapolated to produce the yearly figure indicated. The implications of this obviously need further consideration and discussion.
………………………”
Overton’s response of 30 March 1994 included the following relevant comments:
“The inferences contained in your letter as to the intention of the Manager are groundless. The intentions of the Manager are contained in the Documentation which evidences the contractual agreement entered into by the Manager and the Lessee.
The documentation supplied by the Manager to the residents’ representatives to the Advisory Committee on 11 February, 1994, contains no statement, either express or implied, regarding the intention of the Manager. Your statement that ‘the…intention to recover a claimed shortfall was contained in the information’ is wrong.
………………………
The Manager has no record evidencing any agreement that the Manager would meet any excess expenditure in running the Village. The Documentation provides that The Manager may pay outgoings from its own funds but shall be entitled to claim reimbursement of all amounts so paid (together with simple interest thereon calculated from time to time at the rate at which the Manager could obtain funds by way of overdraft) from the Lessees by the inclusion of such amount in the next succeeding contribution by the Lessees’ to Outgoings. The implication that there exists a financial liability of the Manager, contingent upon the continuation or discontinuation of the development of the Village, is wrong.
………………………
The Manager observes from information already supplied to the lessees, in the Manager’s notification of the convening of the meeting of Lessees on Thursday, 31st March, 1994, that the audited financial statement of the Account for the period ended 30th June, 1992, indicates that the Account was in surplus for this period. The discussion of an estimate is just that. The discussion of the treatment of a hypothetical deficit for the period has no relevance.
In response to the first section of paragraph 6 of your letter the Manager denies that it is bound to meet all shortfalls.
The Manager relies on the Documentation as to intent. What is apparent is that the relationship between the Manager and the Lessees is evidenced in the documentation which comprises the Trust Deed and the Lease, being the Memorandum of the Agreement between the Manager and the Lessees. This relationship is further defined I the operation of the Code. The provisions of the Trust Deed, the Lease and the Code place an obligation on the Lessees to familiarise themselves with the terms of the residence contract, which includes the provisions regarding contributions to outgoings, prior to entering into the agreement for the lease of an apartment or unit and independent of any representation of the Manager. The Manager is not responsible for a Lessee’s failure to protect the Lessee’s own interests.
In response to the second section of paragraph 6 of your letter, as far as the Manager is concerned, the Residents’ Committee cannot speak on behalf of each individual Lessee as regards that Lessee’s motivations.
In response to the third section of paragraph 6 of your letter, the Manager is gratified that you recognise the creation of ‘a very relaxed and happy atmosphere’. However, ascribing the creation of this atmosphere to only, specific factors is an over-simplification of the true situation.
In response to the fourth section of paragraph 6 of your letter, the Manager denies the existence of the implied undertakings.
………………………
The Auditor of the Account has confirmed that the expenses and expenditure contained in the budget of outgoings proposed for the period 1 July, 1993 to 30 June 1994 are outgoings in respect of which the Manager may levy contributions pursuant to the Lease.
………………………
The Manager’s right to require residents, as lessees, to contribute to outgoings in respect of which the Manager may levy contributions, pursuant to the Trust Deed and Lease, is independent of the agreement of residents to the budget referred to in Part 5 of the Code.
………………………
The Manager advises you that the Manager reserves it’s [sic] right to require adjustments for deficits in the Account from the Lessees who were Lessees during the periods to which the deficits relate.
The Manager advises you that the Manager does not waive it’s [sic] right to levy contributions to outgoings pursuant to the Trust Deed, the Lease and the Code. Although such agreement is not required by the Documentation, the Manager invites you to convene a meeting of residents to agree to the budget of outgoings, as proposed, for the period 1 July, 1993 to 30 June 1994.
The Manager thanks you for the referral of this information. However, the Manager refers you to the matters contained in this response generally and cannot agree that a problem requiring resolution exists.
………………………
As previously stated in this response, the provisions of the Trust Deed, the Lease and the Code place an obligation on the Lessees to familiarise themselves with the terms of the residence contract, which includes the provisions regarding contributions to outgoings, prior to entering into the agreement for the lease of an apartment or unit and independent of any representation of the Manager.
The Lessee acknowledges that the Lessee has read and understands the terms and conditions of the Lease and of the Trust Deed and further acknowledges that prior to signing the lease the Lessee has obtained legal advice on the said terms and conditions from a solicitor employed independently of the Lessor.
………………………” (Emphasis added)
Compensation for the loss in capital value of the Lease is intended to be accommodated by the inclusion of a new subclause 10(f) in the Lease Memorandum that would have the effect of requiring Overton to include in any subsequent lease of Unit 53 the same restriction on the recovery of maintenance fees. If Mr and Mrs Murphy are entitled to orders limiting the maintenance fees, it would also be appropriate to restrict the right of Overton to recover contribution to expenditure incurred in operating the Heritage Village from subsequent lessees of Unit 53. Mr and Mrs Murphy would be entitled to be compensated for the whole of the unexpired term of the Lease, not just for the period of their occupation.
I am not satisfied that the language of the orders proposed in the application is appropriate. However, having regard to the conclusions that I have reached, it is inappropriate for me to endeavour to formulate the relief to which Mr and Mrs Murphy might otherwise be entitled.
CONCLUSION
It follows from the conclusions I have reached above that both Mr Murphy’s Proceeding and Mrs Murphy’s Proceeding should be dismissed. However, in view of the currency of the other proceedings to which I have referred above, I shall defer making any orders until the parties have had an opportunity to consider the reasons for my conclusions.
APPENDIX 1
HISTORY OF LITIGATION
Following the Lessees’ failure to agree to draft budgets proposed by Overton for the financial years ended 30 June 1994, 1995, 1996 and 1997, Overton made an application to the Residential Tenancies Tribunal of New South Wales (“the Tribunal”) against six of the Lessees. By that application, Overton sought orders that those Lessees pay the shortfall in the operating expenses for the Heritage Village for the 1994, 1995 and 1996 financial years and pay Overton’s estimate of the level of contributions to outgoings and expenses for the Heritage Village for the 1997 financial year. In December 1996, the Tribunal ruled that it did not have power to make the orders sought. Overton then commenced proceedings 1407 of 1997 in the Equity Division of the Supreme Court of New South Wales by way of appeal from that ruling.
In January 1997, Overton also commenced proceedings in the Local Court of New South Wales against approximately 84 of the Lessees to recover shortfalls in contributions. On 28 January 1997, 112 of the Lessees commenced proceedings 1181 of 1997 in the Equity Division of the Supreme Court seeking, inter alia, orders restraining Overton from prosecuting the proceedings in the Local Court. Proceedings 1407 of 1997 were subsequently consolidated with proceedings 1181 of 1997.
On 27 February 1997, Simos J made an order in proceeding 1181 of 1997 restraining Overton from prosecuting the Local Court proceedings. As a term of that order, the Lessees undertook to consent to judgment being entered against them in the Local Court proceedings for such amounts, if any, as the Supreme Court determines should be paid by them to Overton. They also undertook to increase their contributions to outgoings by 10 per cent from 1 March 1997 until determination of those proceedings in the Equity Division. In addition, Simos J directed the Lessees to take all steps to constitute a representative party to act on behalf of all of them as soon as practicable, but in any event, not later than 7 March 1997.
On 14 March 1997, McLelland CJ in Eq directed that proceedings 1181 of 1997 proceed by way of pleadings and on 9 May 1997, his Honour ordered that those proceedings be expedited. On 23 December 1997, Windeyer J determined preliminary questions formulated in those proceedings concerning the interaction between the 1989 and 1995 Retirement Village Industry Codes of Conduct and the leases granted by Overton. His Honour determined those questions favourably to Overton. An appeal from that determination to the Court of Appeal was dismissed on 3 September 1998.
Overton filed a cross claim in proceeding 1181 of 1997. The cross defendants were the 112 Lessees, who were the plaintiffs in that proceeding. The substance of the allegations made in the cross claim was as follows:
· the cross defendants are lessees under leases granted by Overton;
· pursuant to clause 5 of the leases, any contributions in respect of outgoings notified by Overton to the cross defendants are due and payable within 7 days of receipt of the notice of the amount payable;
· pursuant to clause 5 of the leases, Overton has claimed reimbursement, by way of contribution to outgoings, from the cross defendants;
· the contributions to outgoings have been calculated by Overton pursuant to clause 5 of the leases;
· Overton has notified the cross defendants in writing of the amount payable;
· the cross defendants have failed to pay the amounts notified by Overton.
In the cross claim, Overton sought an order that the cross defendants pay to Overton the amounts that continue to be outstanding under the leases as at the date of any judgment.
A defence to the cross claim was filed on behalf of the cross defendants. In the defence, the cross defendants made allegations similar to some of the allegations made in the present proceedings in the Federal Court. In particular, the cross defendants alleged that:
· Overton represented to the cross defendants that the contributions for the Heritage Village would never exceed an amount which could comfortably be paid by a resident on a full pension without recourse to other income and that the contributions required to be paid would never exceed CPI increases;
· as a result of that representation, the cross defendants assumed that the contributions required to be paid would not exceed the lesser of CPI increases and that sum which a resident on a full pension would be able to afford to pay without recourse to other income;
· Overton intended that the cross defendants make that assumption;
· On the basis of that assumption, the cross defendants entered into their leases with Overton;
· The cross defendants have acted to their detriment in so far as Overton is entitled to recover from the cross defendants a contribution that is in excess of that payable in accordance with the assumption;
· In the circumstances, it would be unconscionable for Overton to recover any sum greater than that which would be payable in accordance with the assumption;
In addition, the defences alleged that the leases were unjust within the meaning of section 7 of the Contracts Review Act in circumstances where Overton was aware that the cross defendants’ income was fixed and would not be able to finance contributions that increased over and above the lesser of CPI increases and the sum which a cross defendant on a full pension would be able to afford to pay without recourse to other income.
On 26 March 1998 and 3 April 1998, Windeyer J made orders under Part 72 of the Supreme Court Rules referring to Mr Peter Taylor SC for enquiry into, and report on, all of the issues arising on the cross claim as to the amounts due to Overton by the 112 cross defendants. All parties agreed that it was practicable to separate the “common” grounds of defence to the cross claim from the other grounds, relying upon misrepresentations and the Contracts Review Act. Accordingly, Mr Taylor SC made orders that, in effect, divided the reference into two parts. The first concerned the “common” defences based upon, inter alia, the construction of the leases. The second part concerned the specific defences of the nature that I have just outlined. Mr Taylor SC conducted the first part of the reference during August and October 1998 and completed his report in November 1998.
The matter came before Windeyer J on 17 December 1998 for the purposes of considering the report of Mr Taylor SC. At that time, there was discussion as to the further conduct of the action and how that ought to be handled in the light of an application by Overton for entry of judgment on the cross claim. By that time, Windeyer J had concluded that the particular defences to the cross claim could not be allowed to proceed as then constituted. Windeyer J observed that it had been envisaged by Simos J that a person would be appointed to represent the Lessees on the claim originally made before Simos J and that, once that claim, as to the rights of Overton to charge outgoings to the group members, was determined, judgment would be entered by consent on the actions brought by Overton in the Local Court.
In the light of the matters raised by the cross defendants in their defence to cross claims, Windeyer J considered that it was necessary for the Court to take some control. Accordingly, his Honour indicated that the proceedings on the existing cross claim must be brought to an end and that individual claims made in the defences must be raised by separate actions. His Honour said, therefore, that any matters raised as individual defences to the cross claim would have to be pursued by separate action. His Honour directed the solicitor for the cross defendants to be in a position to inform the Court on 4 February 1999 which cross defendants intended to pursue such separate claims.
On 4 February 1999, Windeyer J ordered that the cross defendants file and serve on Overton on or before 13 February 1999 a document setting out, inter alia, the cross defendant’s contentions as to the amount for which judgment should be entered against each of them in accordance with the report of the referee. His Honour also directed that each of the cross defendants who wished to bring claims against Overton file and serve by 13 February 1999 a verified statement of claim and a notice of motion seeking further directions returnable before Windeyer J on 24 February 1999. The proceedings were listed for further argument on 24 February 1999 on the question of:
· the amount of the judgment to be entered against each of the cross defendants pursuant to the referee’s report;
· whether the injunction restraining Overton from proceeding in the Local Court be dissolved;
· whether, and if so on what terms, there should be a stay of any judgment in the proceedings against the cross defendants pending determination of their claims against Overton.
None of the cross defendants filed or served a verified statement of claim as contemplated by his Honour. However, the solicitors for the cross defendants prepared statements of claim on behalf of some of the cross defendants. While those statements of claim were not formally filed and served on Overton, they were verified and Overton has been provided with copies of them. The substance of the claims made is much the same as those made in the pleadings presently before me.
On 24 February 1999, senior counsel then appearing for Overton before Windeyer J, after referring to the statements of claim, invited counsel for the cross defendants to file them in the Equity Division. That invitation was apparently repeated on 16 March 1999 in open court. The invitation was not taken up.
On 24 February 1999, Windeyer J made orders as follows:
· That each of the cross defendants named in a schedule make an interim payment to Overton of the amount shown in that schedule;
· That upon Overton undertaking to the Court to take no further steps in the proceedings in the Local Court, the injunction granted by Simos J on 27 February 1997 be dissolved;
· That the proceedings be listed for further argument on 16 March 1999 on the question of the amount of the judgment to be entered against each of the cross defendants pursuant to the referee’s report.
Seventeen of the cross defendants failed to comply with the order made by Windeyer J for an interim payment. Overton subsequently commenced proceedings against those cross defendants for contempt of Court. I do not have before me any evidence as to the result of those proceedings.
On 30 March 1999, after recounting much of the background outlined above, Windeyer J observed that it had been accepted or ordered that, in one form or another, separate actions needed to be brought by the cross defendants for the claims set forth in their defence to the cross claim. His Honour also observed, however, that those claims would require substantive orders if they are to be of any avail.
In the meantime, this proceeding had been commenced in the Federal Court on 23 February 1999. Windeyer J said on 30 March 1999 that, had the cross defendants’ claims based on misrepresentation and the Contracts Review Act proceeded as he had envisaged by separate action in the Supreme Court, it would have been appropriate to defer making any order for costs on the cross claim until those matters were determined. However, his Honour did not consider that the same position arose after this proceeding had been commenced.
By notice of motion filed on 23 March 1999, most of the cross defendants sought a stay of any judgment entered against them on the cross claim in proceedings 1181 of 1997. The basis for that stay was that this proceeding had been commenced in the Federal Court. It was apparently thought that, if the action in this Court succeeded in full, it was likely that the damages awarded to the cross defendants would exceed the amount of the judgments then being entered against them individually.
Windeyer J concluded that the cross defendants’ claims must be brought by separate action and that, accordingly, judgments could not be entered. Had the Local Court claims continued, it was likely that, if the defences to the cross claim were raised in the Local Court proceedings, they would either have been heard in the Local Court to conclusion, or the Local Court proceedings would have been stayed to allow the defences to be raised in a court having appropriate jurisdiction. His Honour considered that at least two of the pendant claims raised in this proceeding in the Federal Court were always recognised, albeit perhaps incorrectly, as being part of the matters for determination in the Equity Division. His Honour considered that that provided justification for a stay. However, his Honour considered that it would be unfair to Overton not to require a substantial payment towards outgoings for which the cross defendants were liable.
His Honour then ordered that:
· the report of Mr Taylor SC be adopted;
· all matters not yet finally determined by Mr Taylor SC be determined by the Supreme Court;
· all matters arising under the individual defences raised by the cross defendants, being estoppel and Contracts Review Act defences, be brought to trial by separate action by the cross defendants raising such matters but that judgments be entered on Overton’s cross claim without regard to such defences, subject to any application for a stay;
· judgment be entered for Overton on the cross claim against individual cross defendants for the amounts set forth in a schedule;
· proceedings for enforcement of those judgments against the cross defendants (subject to some exceptions) be stayed upon condition that the cross defendants obtaining the benefit of such stay pay to Overton 50 per cent of the amount shown against the name of that cross defendant in the schedule within 21 days, such stay to continue until the conclusion of the Federal Court proceeding or earlier order of the Supreme Court.
APPENDIX 2
RELIEF CLAIMED
The relief sought in the current application in Mr Murphy’s Proceeding is as follows:
“1.A declaration that Overton has contravened s.52 and s.51AA of the Trade Practices Act, 1974, (Comm.).
2.Damages pursuant to s.82 of the Trade Practices Act, 1974, (Comm.).
3.An order pursuant to s.87 of the Trade Practices Act, 1974, (Comm.):-
(a)Varying Clause 5 of the Lease dated 20 October 1992, between the parties by adding sub-clause (m):
(m)The Lessor shall be limited to recovering no more than 39.72% of the full single pension from time to time from the Lessee by way of outgoings under this Lease.
(b)Restraining Overton from recovering outgoings in excess of 39.72% (or in the alternative 45.24%) of the full single pension from time to time from the Applicant as Lessee and from any future Lessee of Unit 53 of the Heritage Retirement Village up to 19 October 2091; and
(c)Restraining Overton from completing any Contract for Sale of Land on which the Heritage Retirement Village is situated, unless or until it produces an acknowledgment from any purchase of the said land that they are purchasing subject to any amendments to the Lease ordered by this Court in these proceedings.
4.An order pursuant to s.7 of the Contracts Review Act, 1980 (NSW) restraining Overton from recovering outgoings in excess of 39.72% (or in the alternative 45.24%) of the full single pension from time to time from the Applicant as Lessee and from any future Lessee of Unit 53 of the Heritage Retirement Village up to 19 October 2091.
5.An order pursuant to s. 7 of the Contracts Review Act, 1980, (NSW) that Overton be restrained from recovering as outgoings under the said Lease:
(a) any amount for legal or accounting costs; and
(b) interest on moneys borrowed or raised6.A declaration that Overton is estopped from recovering outgoings under the said Lease in excess of 39.72% (or the alternative 45.24%) of the full single pension from time to time from the Applicant as Lessee and from any future Lessee of Unit 53 of the Heritage Retirement Village up to 19 October 2091.
7.Damages under the general law.
8.Interest pursuant to s.51A of the Federal Court of Australia Act,
1976 (Comm.)
9. Costs”
The relief claimed in the current application in Mrs Murphy’s Proceeding is as follows:
“1.A declaration that Overton has contravened s.52 and s.51AA of the Trade Practices Act, 1974, (Comm.).
2.Damages pursuant to s.82 of the Trade Practices Act, 1974, (Comm.).
3.Orders pursuant to s.87 of the Trade Practices Act, 1974, (Comm.) to:-
(a)Vary Clause 5 of the Lease dated 20 October 1992 between Overton as Lessor and Mr and Mrs Murphy as Lessees (‘the Lease’) by adding sub-clause (m).
• (m)‘The Lessor shall be limited to recovering from the lessee by way of outgoings under sub-clause (c) other than sub-clause (c) (iv) of this Lease, outgoings in excess of 45.24% of the full single pension from time to time, such increases to be back dated to the date of the pension increase’; or in the alternative
•(m) ‘The Lessor shall be limited to recovering from the Lessee by way of outgoings under sub-clause (c) other than sub-clause (c) (iv) of this Lease, outgoings in excess of $55.71 per week plus quarterly CPI increases to be payable from 1 January, 1 April, 1 July and 1 October of each year during the term of the Lease’; or in the alternative.
•(m) ‘The Lessor shall be limited to recovering from the lessee by way of outgoings under sub-clause (c) other than sub-clause (c) (iv) of this Lease, outgoings in excess of X-Y where:
ºX = the full single pension from time to time; and
ºY = $87.09 + CPI increases since 1 July 1994.’
(b)Order that an account be taken as to the extent to which the Lessee has over-paid the Lessor under the Lease.
(c)Order that he Respondent repay the Applicant the amount of over-payment to date.
(d)Vary Clause 10 of the Lease by adding sub-clause (f) as follows:-
(f)‘Should the Lessee of Unit 53 from time to time up to 19 October 2091, offer to surrender the Lease to the Lessor, then the lessor will use its best endeavours to re-let Unit 53 of the Heritage Retirement Village on the same terms as this Lease as amended by the orders of the Court in Federal Court proceedings No. 159 of 1999.’
(e)Order that the Respondents be restrained from completing any Contract for Sale of Land on which the Heritage Retirement Village is situated, unless or until it produces an acknowledgment from any purchaser of the said land that they are purchasing subject to any amendments to the lease ordered by this Court in these proceedings.
4.An order pursuant to s.7 of the Contracts Review Act, 1980 (NSW) restraining Overton from recovering outgoings in excess of 45.24% (or in the alternative $55.71 per week plus quarterly CPI increases from 20 October 1992) of the full single pension from time to time from the Applicant as Lessee and from any future Lessee of Unit 53 of the Heritage Retirement Village up to 19 October 2091.
5.An order pursuant to s.7 of the Contracts Review Act, 1980, (NSW) that Overton be restrained from recovering as outgoings under the said Lease:-
(a)any amount for legal or accounting costs; and
(b)interest on moneys borrowed or raised.
6.A declaration that Overton is estopped from recovering outgoings under the said Lease in excess of 45.24% (or in the alternative $55.71 per week plus quarterly CPI increases from 20 October 1992) of the full single pension from time to time from the Applicant as Lessee and from any future Lessee of Unit 53 of the Heritage Retirement Village up to 19 October 2091.
7.Damages under the general law.
8.Interest pursuant to s.51A of the Federal Court of Australia Act, 1976, (Comm.)
9.Costs.”
APPENDIX 3
CLAUSES OF THE LEASE MEMORANDUM
“4. RENT
(a)The Lessee covenants with the Lessor that the Lessee will pay to the Trustee on or before the date of commencement of the Lease… the Total Rent being the amount stated in Item (4) of the Reference Schedule.
………………………
(j)The Lessor shall on the last day of each month during the first five (5) years of the term of the Lease, be and become absolutely entitled to the Accrued Rent being one-twelfth (1/12) of twenty per cent (20%) of the Total Rent in respect of the Lease…provided always that no money shall be payable as Accrued Rent in respect of the Lease once the Total Rent shall have been fully paid or credited to the Manager. The Lessee acknowledges that, pursuant to and in accordance with the Trust Deed, the Total Rent will be lent to the Lessor and that the Lessor will be entitled to a reduction in the amount of monies owing to the extent of the Accrued Rent from time to time.”
“‘Total Rent’ means the lump sum amount of rent payable to the Trustee by a Lessee under a Lease as stated in Item (4) of the Reference Schedule and being fixed at twenty five per cent (25%) of the Lease Price.”
“‘Lease Price’ means the sum of the Total Rent and Lease Deposit payable by a Lessee.”
“‘Lease Deposit’ means the amount payable by a lessee pursuant to this Lease and the Trust Deed and being fixed at seventy-five per cent (75%) of the Lease Price.”
“6. LEASE DEPOSIT
The Lessee shall prior to the commencement of this Lease pay or cause to be paid to the Trustee as a component of the Lease Price, a Lease Deposit of the amount specified in Item (5) of the Reference Schedule which amount shall be dealt with and adjusted in accordance with the terms of the Trust Deed… and which amount shall following the said adjustment be refunded in accordance with the terms of the Trust Deed.
………………………
10. SURRENDER
(a)The Lessee shall be entitled to request the Lessor terminate and accept a surrender of this Lease at any time during the term thereof in accordance with the Trust Deed…
(b)On and from the date of any surrender and payment of Refund the Lessee shall release the Lessor from all duties and obligations under this Lease and the Trust Deed and the Lessor shall release the Lessee and any Guarantor from all liability which would otherwise arise under this Lease and the Trust Deed subsequent to such date.”
“‘Refund’ means the amount of Refunded Rent (if any) plus the Lease Deposit adjusted pursuant to and in accordance with the Trust Deed.
‘Refunded Rent’ means that amount (if any) of rent calculated by subtracting from the Total Rent the Total Accrued Rent from time to time pro rata to the end of the month in which the Refund becomes payable.”
“’Accrued Rent’ means the amount of Total Rent to which the Lessor should be entitled in accordance with clause 4 of this Lease and the Trust Deed.”
APPENDIX 4
CLAUSES OF THE TRUST DEED
“10. Payment and Acceptance of Lease Price
(1)Subject to Clause 12 the Lease Deposit and Total Rent shall be lent interest free and unsecured to the Manager by the Lessee and shall be repaid to the Lessee in accordance with Clauses 13 and 15.
(2)Subject to Clauses 11, 12 and 40 the Trustee will accept and hold on trust on behalf of the Lessees in the name of the Trustee at an Approved Bank all amounts of Lease Deposit and Total Rent paid by a Lessee provided that the Trustee shall not be required to invest such monies.
(3)Where a Lessee consists of more than one person the Lease Price shall be received by the Trustee on account of the persons comprising such Lessee as joint tenants.
11.Loan to Manager
Upon the Manager giving to the Trustee a Lease purporting to have been duly executed by the Lessee named therein and the Manager, the Trustee shall, pursuant to Sub-Clause (1) of Clause 10, pay to the Manager on behalf of the Lessee such proportion of the Lease Price received by the Trustee in respect of the said Lease as is not retained by the Trustee pursuant to Clause 12.
12. Retained Monies held by Trustee
(1)The Trustee shall be entitled to retain two point five per centum (2.5%) of each Lease Deposit received by it up to a maximum amount to be agreed upon by the Trustee and Manager from time to time. The Trustee shall invest such Retained Monies in the name of the Trustee in an Authorised Investment.
(2)The amount retained by the Trustee in respect of the Lease Price pursuant to this Clause shall be held in trust as part of the Trust Fund in accordance with the provisions of this Deed.
13.Refund of Lease Deposit and Refunded Rent
(1)Subject to the provisions of this Clause, a Refund shall become payable by the Manager at the earlier of termination of a Lease: -
(a)in accordance with the terms and conditions thereof and the vacation of such Unit by the Lessee; or
(b)by reason of the death of the Lessee or where more than one person constituted the Lessee, upon the death of such survivor;
PROVIDED ALWAYS THAT the Trustee shall have received a Lease in respect of the said Unit duly executed by the manager and the incoming Lessee together with the Lease Price.
(2)A Refund pursuant to Sub-Clause (1) of this Clause shall be payable ONLY to the following persons:-
(a)in the case of termination of a Lease by death, in accordance with Clause 42; and
(b)in the case of termination of a Lease by reason other than death:-
(i)where there is at the date of termination one person constituting such Lessee (whether as a sole Lessee or as survivor of a number of persons previously constituting such Lessee), to such person;
(ii)where there is at the date of termination more than one person constituting such Lessee, to such persons jointly.
(3)The Manager covenants with the Lessee that upon any Refund becoming payable it will repay to the Lessee (or the person so entitled) the Refund. Payment of the Refund shall be made by way of repayment of the amount of Monies Owing as adjusted pursuant this Deed (including without limitation Sub-Clause (5) of this Clause) PROVIDED ALWAYS THAT the Manager shall not be required to repay the difference (if any) between the amount o the Refund and the amount of the Monies Owing.
(4)Subject to this Clause the Manager shall pay to whomsoever is entitled the full amount of the Refund PROVIDED THAT such amount shall only be payable:-
(a)upon production by whomsoever is so entitled of a legal release in respect of such Refund; and
(b)in the case of a Refund paid to a Lessee’s legal personal representative, in accordance with Clause 42.
(5)All Lease Deposits, upon termination of their respective Leases shall be adjusted in either of the following ways as the case may require –
(a)by the addition of the Lessee’s Capital Gain; or
(b)by the subtraction of the Lessee’s Capital Depreciation,
PROVIDED HOWEVER that if a Lessee has failed to pay to the Manager its contributions towards Outgoings as and when they fall due and payable then the aggregate of such accrued Outgoings (together with any interest due thereon) in arrears at the time of the said termination shall also be deducted from the amount of Lease Deposit.
(6)No interest or other accretion or deduction shall be payable, deductible or refundable on any amount of Lease Deposit or Refunded Rent or Lessee’s Capital Gain (if any) save and except as expressly provided in this Deed and the Lease.
(7)Simultaneously with the payment of the Refund the Manager shall in the case of an adjustment to the Lease Deposit pursuant to Sub-Clause (5)(a) of this Clause be entitled to retain absolutely in its own right an amount equal to the Lessee’s Capital Gain PROVIDED ALWAYS that where the Lease Deposit is adjusted pursuant to Sub-Clause (5)(b) of this Clause no part of the Lessee’s Capital Depreciation shall be payable to the Lessee by the Manager.
(8)Notwithstanding the foregoing provisions, to the extent to which the Manager does not make payment of a Refund properly due to a Lessee, the Trustee shall pay the amount of the deficiency to the person entitled to the Refund out of the Trust Fund PROVIDED THAT the Trustee may in its absolute discretion require the Lessee to exhaust all available remedies against the Manager in respect thereof and PROVIDED FURTHER THAT should there be more than one Lessee entitled to payment pursuant to this Sub-Clause and the Trust Fund shall be insufficient to pay the total amount due, then the Trust Fund shall be applied on a pro rata basis to the said Lessees.
(9)The Manager covenants with the Trustee that upon the Trustee making any payment from the Trust Fund pursuant to Sub-Clause (8) of this Clause, the Manager will (upon request by the Trustee) reimburse the Trustee an amount not exceeding the said payment and such amount shall be held and form part of the Trust Fund.
14.Manager’s Option to pay out Lease Deposit
In the event that a Lessee (or in the case of a deceased Lessee his personal representative executor or administrator) is unable to find a suitable Qualified Person to enter into a new Lease in respect of the Unit the Manager may in its absolute discretion agree upon an amount with the Lessee and which amount shall, for the purposes of the calculation of any Lessee’s Capital Gain or Lessee’s Capital Depreciation by treated as the Lease Deposit which would have been paid by the incoming Lessee, whereupon the Manager shall refund to the Lessee his Refunded Rent (if any) and his Lease Deposit (adjusted pursuant to an in accordance with the provisions herein) and the Lessee shall deliver up to the Manager his Lease and sign such documents as the Manager considers necessary to effect any necessary surrender.
15. Accrued Rent
(1)The Manager shall on the last day of each month during the first five (5) years of the term of a Lease be and become absolutely entitled to payment of the Accrued Rent being one twelfth (1/12) of twenty percent (20%) of the Total Rent in respect of each and every Lease and such amounts shall be payable monthly on the last day of each and every month as aforesaid provided always that no monies shall be payable as Accrued Rent in respect of any Lease once the total Rent in respect of that Lease shall have been fully paid to the Manager.
(2)To the extent that the Total Rent pursuant to Clause 11 of this Deed has been lent to the Manager the Manager shall be entitled to a reduction in the amount of Monies Owing to the extent of the Accrued Rent from time to time payable pursuant to Sub-Clause (1) of this Clause.”
APPENDIX 5
CONTENTS OF INFORMATION BOOKLET
“When purchasing retirement accommodation it is important that you understand what you will receive for your capital outlay and the fees for which you will be responsible.
The Trust Deed which is part of your legal documentation guarantee that all services and facilities promised to you on purchase of your unit or apartment are forthcoming. Perpetual Trustee’s role as trustee for the Heritage is to ensure that residents’ rights are upheld and the standard of the village is maintained.
ON-GOING MANAGEMENT AND MAINTENANCE PROGRAM.
Overton Investments Pty. Limited, is committed to the on-going management of the village. This will ensure that the highest quality of services will be provided at The Heritage by staff under the control and supervision of a village administrator.
The Heritage introduces a unique REPLACEMENT PROGRAM –
THE COST OF WHICH IS INCLUDED IN THE MAINTENANCE FEES.
The replacement program supports our policy of removing the problems of home maintenance from the resident. No more unexpected bills, they have all been budgeted for in the maintenance fee.
Clerical and personal-care assistants, gardeners a handyman/driver, cleaners, as well as a cook, kitchen helpers and a night supervisor will forma highly competent and professional team able to take care of residents’ requirements.
COMMON AREAS.
*There will be no charge for residents or their visitors to use facilities such as the heated pool & spa, billiard room, library, craft room, residents’ workshop, Chapel, auditorium card areas and all recreation areas, plus the Heritage bus. All these costs are budgeted for in the maintenance fees.
*The shops, medical centre, restaurant & bar operate on a commercial basis.
***NO PROFIT GOES TO THE MANAGEMENT FROM MAINTENANCE FEES. ***
Present budget figures would indicate the following level of cost payable monthly by Independent Living Units:
A.= two bedrooms B.= one bedroom plus study C.= one bedroom.
Independent Living
Pensioner Pensioner Non Pensioner Non Pensioner
Yearly Cost Weekly Cost Yearly Cost Weekly Cost
A. $3,068 $59.00 $3,332 $64.08
B. $2,897 $55.71 $3,161 $60.79
C. $2,494 $47.97 $2,759 $53.05
D. $3,096 $59.54 $3,360 $64.62
E. $3,358 $64.58 $3,622 $69.66These levies have been budgeted to cover items such as:-
· Insurance (eg property insurance etc.)
· Land Tax
· Water Rates
· Council Rates
· Garbage Removal
· Road Sweeping
· Gardening
· Pest Control
· Village bus Expenses
· Community Centre Activities
· External Property Repairs and Maintenance
· Emergency Call System
· Common areas amenities
· Pool maintenance
· Interior Maintenance
· Administration expenses
THE REPLACEMENT PROGRAM FOR SELFCARE, FLEXICARE AND SERVICED APARTMENTS PROVIDES FOR THE REPLACEMENT OR REPAIR OF THE FOLLOWING:-
· Interior painting
· Common area Carpets
· Stove
· Dryer
· Replacement of broken wardrobe & bathroom mirrors
· Blinds
· Air Conditioner.
· Rangehood
· Taps and showers
· Bathroom fittings (towel racks showers)
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Buying accommodation in a retirement village is unlike buying a home unit or a house.
When you buy into a village you acquire more than the unit accommodation. You have purchased the rights to all the facilities and services offered and documented in your lease and trust deed.
The Heritage offers all of the facilities and features of your present home and some you may not currently enjoy, but without the physical and financial burdens that maintaining such a home would normally demand.
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QUESTIONS YOU MIGHT LIKE ANSWERED
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7. Q. What other costs will I incur once I become a resident?
A.Because The Heritage is designed to provide you with a worry-free, distinctive life style, Overton Investments Pty. Limited will undertake the management and operation of The Heritage and allocate these operating expenses in the same proportion that the floor area of your selected apartment or unit bears to the total floor area of the apartments or units. The anticipated amount of this weekly maintenance/service fee for a self-care unit is estimated to be around $47.53 average per week dependent on the size of the apartment.
8.Q. What are the operating expenses?
A.Your weekly maintenance/service fee pays for :-
·All exterior maintenance, repairs and upkeep of the units and the Lodge Apartments.
·All gardening and landscaping of common areas.
·Maintenance of common plumbing and electrical facilities.
·Maintenance of all streets, pathways, sewers and exterior lighting.
·Full replacement fire and hazard insurance on buildings.
·Administration expenses.
·A 24 hour medical emergency contact.
·All charges for water, gas, electricity and telephone provided for the general benefit of all within the common or service areas.
·All maintenance, repairs and upkeep of community facilities.
·Interior maintenance to the unit or apartment.”
I certify that the preceding three hundred and twenty-seven (327) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 15 June 2000
Counsel for the Applicants: Mr G A Moore Solicitor for the Applicants: The Aged Care Rights Service Counsel for the Respondent: Mr J C Kelly SC & Mr A J McInerney Solicitor for the Respondent: Gadens Lawyers Date of Hearing: 7, 8, 9, 10, 16, 17, 21, 23 March; 7 April; 5, 16, 17, 18, 19 May 2000 Date of Judgment: 15 June 2000
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