Overton Investments v Carnegie

[2000] NSWSC 581

CITATION:	Overton Investments v Carnegie & Anor [2000] NSWSC 581
CURRENT JURISDICTION:	Common Law Division
FILE NUMBER(S):	SC 10754/00
HEARING DATE(S):	30 May 2000
JUDGMENT DATE:	28 June 2000
PARTIES :	Overton Investments Pty Limited (Plaintiff) v Neville John Carnegie (First Defendant) Residential Tribunal (Second Defendant)
JUDGMENT OF:	Davies AJ

LOWER COURT JURISDICTION :	Residential Tribunal
LOWER COURT FILE NUMBER(S) :	99/28229
LOWER COURT JUDICIAL OFFICER :	H E Moore, Member

COUNSEL :	P: Mr A J McInerney 1D: Mr G A Moore 2D: Submitting Appearance
SOLICITORS:	P: Gadens Lawyers 1D: The Aged-care Rights Service (TARS) 2D: I V Knight, Crown Solicitor
CATCHWORDS:	Administrative Law - whether budget impasse in relation to retirement village - nature of application to the Court from ruling of Residential Tribunal on question of law - whether application limited to error of law - whether provisions of Code to be given a technical or a substantive effect.
LEGISLATION CITED:	Retirement Village Industry Code of Practice Regulation 1995, cls 39, 40, 41 Retirement Villages Act 1989, s 14A Residential Tribunal Act, 1998, ss 22, 60 Constitution, s 75(v) Fair Trading Act 1987, s 78A Trade Practices Act 1974 (Cth), s 87 Contracts Review Act 1980
CASES CITED:	Murphy v Overton Investments Pty Ltd (unrep, Windeyer J, 23/12/97) Murphy v Overton Investments Pty Ltd (unrep, Court of Appeal, 3/9/98) The King v Blakeley; Ex parte The Association of Architects, Engineers, Surveyors and Draughtsmen of Australia (1950) 82 CLR 54 The Queen v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 Reg v Home Secretary; Ex parte Khawaja (H.L.(E.)) [1984] 1 AC 74 Re Ludeke; Ex parte Queensland Electricity Commission (1985) 60 ALR 641 The Queen v Commissioners for Special Purposes of the Income Tax (1888) 21 QBD 313 Reg v The District Court; Ex parte White (1966) 116 CLR 644 Director-General of Social Services v Chaney (1980) 31 ALR 571
DECISION:	Application dismissed with costs.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

DAVIES AJ

28 JUNE 2000

10754/00 - OVERTON INVESTMENTS PTY LIMITED v Neville John CARNEGIE & ANOR
JUDGMENT

1    HIS HONOUR: Overton Investments Pty Limited ("Overton"), which is the plaintiff in these proceedings and the administering authority of The Heritage Retirement Village, and the residents of that village, who are represented by the Secretary of the Residents' Committee, Neville John Carnegie ("the first defendant"), appear to have learnt nothing from their many forays into litigation. It was made clear by Windeyer J in Murphy v Overton Investments Pty Limited (unreported, 23 December 1997) and, on appeal, by Fitzgerald JA, with whom Priestley and Powell JJA agreed in Murphy v Overton Investments Pty Limited (unreported, 3 September 1998), that the provisions of the Retirement Village Industry Code of Practice Regulation, 1995 ("the Code") are directed to good behaviour and good management rather than to legal rights. They are general provisions affecting all residents which should be enforced by the methods envisaged by the Code itself, rather than by litigation in the courts. At p 14 of the appeal, Fitzgerald JA cited the following from the reasons of Windeyer J:

"… I have set out Clause 3 of each regulation, which makes the relationship between the Regulation and the Code under s95 of the Fair Trading Act clear. However, a code of practice is not necessarily a statutory enactment creating duties, obligations and rights which can be enforced by action by those involved in the industry in respect of which a code is introduced. The fact that the code provides that it is mandatory, in my view, means no more that it relates to all retirement villages so that its operation cannot be excluded by contract … Further, many provisions of the code are cast in language which is directed to good behaviour or good management rather than contractual rights. … Such general statements are not usually to be read as giving rise to private rights enforceable in courts."

At pp 23-24, Fitzgerald JA said:

"The provision of the 1995 Code of Practice which is of primary importance for present purposes is subcl 3(2), which envisages that the 'obligations' for which the Code provides 'will be monitored … and can be enforced' under the Fair Trading Act . Consistently with established principles of statutory construction this should be regarded as the intended method of enforcement. Reference has already been made to the material provisions of the Fair Trading Act . It is a central feature of the scheme contained in that Act that a code obligation can only be enforced by, or with the consent of, the Director-General of the Department of Fair Trading. This ensures that individual residents or groups of residents, or an owner of manager, cannot take manipulative advantage of a code of practice or frustrate the exercise of rights or the performance of obligations under residence contracts contrary to 'good practice for fair dealing' and 'the basic need for the management of the village to be conducted in a sensible and financially prudent manner.' Under the regime established by the Fair Trading Act and the Codes of Practice, the views of interested persons other than the immediate disputants can be ascertained and taken into account."

2 Thus, the statute and the regulations have established a regime for the sensible and prudent administration of retirement villages involving good management by the administering authority with appropriate input from the residents. Section 14A of the Retirement Villages Act, 1989 uses the words, "reasonable consultation between the residents and the administering authority". This expression accords with the words and object of the Code.

3    In the case of The Heritage Retirement Village, it is clear that neither the administering authority nor the residents have abided by the precepts for appropriate conduct which the Code has laid down. Neither side has acted in a reasonable, responsible and effective manner. When, inevitably, disputes have arisen, the parties have engaged in litigation with a view to having what they describe as legal issues resolved.

4    The first application came before Windeyer J. His Honour's ruling was taken on appeal and became the subject of the judgment of the Court of Appeal. There was a reference to Peter Taylor SC to resolve some of the factual issues in dispute. Mr Taylor's report became the subject of four separate judgments by Windeyer J who was called upon to rule on the acceptance of his report. There was an application made to the Commercial Tribunal when the Director-General of the Department of Fair Trading took steps to improve the relationship between the parties. That proceeding having been commenced before the Commercial Tribunal, application was made to this Court for a ruling on whether the Code was valid. Windeyer J held that it was. In addition to litigation in this Court, there has been litigation in the Local Court and complex litigation in the Federal Court of Australia.

5    The quantum of the litigation which has occurred between the parties is inexcusably inappropriate. It is time that both sides studied the Code and adjusted their conduct to accord with it. Reasonable, responsible behaviour on both sides is required. This will necessitate give and take by both.

6 The present litigation unfortunately follows the bad habits of the past. Overton, as administering authority, prepared a budget for the period 1 July 1999 to 30 June 2000 and set out a structure for its approval. The residents agreed with neither the structure laid down by Overton nor the budget proposed by it. An application by Mr Carnegie, the Secretary of the Residents' Committee was lodged under s 14A of the Retirement Villages Act, which permits an application to be made to the Residential Tribunal ("the Tribunal") for the resolution of a budget impasse. Section 14A, inter alia, reads:

(1) A resident, or the administering authority, may apply to the Tribunal for the purpose of resolving a budget impasse.

(2) For the purposes of this section, a budget impasse occurs if the residents in a retirement village fail to agree to a proposed budget:
(a) after all budget consultation processes under any applicable code have been complied with in relation to the budget, or
(b) if there are no such processes - after the budget has been the subject of reasonable consultation between the residents and the administering authority, and after the residents have had a reasonable time in which to consider it.

7 Before the Tribunal could deal with the merits of the matter, Overton sought a ruling as to whether or not the Tribunal had jurisdiction to deal with the matter. After a hearing and after receiving lengthy written submissions, the Tribunal ruled that there was a budget impasse and that it had jurisdiction under s 14A of the Retirement Villages Act.

8 The Tribunal also ruled that it was not precluded from proceeding by reason of s 22(7) of the Residential Tribunal Act, 1998 which provides:

(7) If, at the time when an application is made to the Tribunal in accordance with this Act, an issue arising under the application was the subject of a dispute in proceedings pending before a court, the Tribunal, on becoming aware of those proceedings, ceases to have jurisdiction to hear or determine the issue.

9 The Tribunal having made this interim determination, Overton applied to this Court for orders under s 60 of the Residential Tribunal Act which provides, inter alia:

(1) Except as provided by this section, a court of record has no jurisdiction to grant relief or a remedy by way of:

(a) a judgment or order in the nature of prohibition, mandamus, certiorari or other relief, or

(b) a declaratory judgment or order, or

(c) an injunction,
in respect of a matter heard and determined or to be heard or determined by the Tribunal in accordance with this Act or in respect of any ruling, order or other proceeding relating to such a matter.
(2) A court is not precluded from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in which the jurisdiction of the Tribunal to determine the matter was disputed, where the ground on which the relief or remedy is sought is that:
(a) the Tribunal gave a ruling as to its jurisdiction that was erroneous, …

Erroneous

10 When, in judicial review proceedings, a court considers a ruling by a primary decision-maker that the decision-maker has jurisdiction in a particular matter, the court may have power to determine both the facts involved in the ruling and the law taken into account. Particularly, this is so where constitutional questions are concerned or significant issues, such as life, liberty, deportation and the like, are involved. The High Court of Australia has often ruled that it may determine jurisdictional facts when application is made for the exercise of its supervisory powers under s 75(v) of the Constitution: see The King v Blakeley; Ex parte The Association of Architects, Engineers, Surveyors and Draughtsmen of Australia (1950) 82 CLR 54; The Queen v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Company Pty Ltd (1953) 88 CLR 100. A like approach in the migration area may be seen in Reg v Home Secretary; Ex parte Khawaja (H.L.(E.)) [1984] 1 AC 74. However, the principle is not limited to significant matters of the type that I have mentioned. Much depends on the statute.

11    When a court considers that it may determine for itself the jurisdictional fact in question, it nevertheless usually gives great weight to the view of the facts taken by the tribunal. In The King v Blakeley, Fullagar J said, at 92:

"While, as I have said, the superior court which is invited to issue mandamus or prohibition must decide for itself on the material before it every question of law and every question of fact, there must, almost of necessity, be a difference in its attitude to the decision of the inferior court according as the question of jurisdiction depends on matter of law or matter of fact. If it depends on matter of law the question of law must simply be decided like any other question of law. But, if the jurisdiction depends on matter of fact, considerable weight is attached to the view of the facts taken by the inferior court."

See also Re Ludeke; Ex parte Queensland Electricity Commission (1985) 60 ALR 641 at 645.

12    A statute may, however, confer upon a tribunal or decision-maker the power of deciding whether or not the tribunal or decision-maker has jurisdiction, that is to say, it may confer jurisdiction to decide conclusively the preliminary facts which give it jurisdiction. In The Queen v Commissioners for Special Purposes of the Income Tax (1888) 21 QBD 313, Lord Esher, M.R. said at 319:

"When an inferior court or tribunal or body, which has to exercise the power of deciding facts, is first established by Act of Parliament, the legislature has to consider what powers it will give that tribunal or body. It may in effect say that, if a certain state of facts exists and is shewn to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things, but not otherwise. There it is not for them conclusively to decide whether that state of facts exists, and, if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction. But there is another state of things which may exist. The legislature may intrust the tribunal or body with a jurisdiction, which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to proceed further or do something more. "

An example may be seen in Reg v The District Court; Ex parte White (1966) 116 CLR 644, where jurisdiction was conferred upon a magistrate and on appeal upon the District Court to make a certain order in the event that the applicant held "a conscientious belief that does not allow him to undertake duties of a combatant nature" . The High Court of Australia constituted by Barwick CJ, McTiernan, Taylor, Menzies and Windeyer JJ, held that the Court would not investigate the facts for itself, for the relevant question of fact was expressly committed to the determination of the Court of Petty Sessions and, on appeal, the District Court, each of whose decision was declared to be final and conclusive.

13    It is not in dispute in the present case that a decision of the Tribunal could be set aside if it erred in law. The question arises, however, whether the word "erroneous" in s 60(2)(a) of the Residential Tribunal Act refers in the context only to a decision that was erroneous in law or includes one that was erroneous in fact.

14    This point was not debated before me, counsel for Overton putting submissions on matters of law and counsel for the residents appearing to accept that the application was properly before the Court. I tend to the view that, in the context of the Retirement Villages Act and the Code, the existence or not of a budget impasse is simply one of the matters with which the Tribunal must determine in the course of its consideration of an application before it. It seems to me that s 14A(1) empowers a resident or an administering authority to apply to the Tribunal for the purpose of resolving a budget impasse. The launching of an application seeking that the Tribunal resolve a budget impasse confers jurisdiction upon the Tribunal. Thereafter, the Tribunal will have to consider many facts, including those facts which bear upon the issue as to whether or not a budget impasse exists.

15    If this view is correct, then it may be that both the request for a jurisdictional ruling and this application were misconceived and that any challenge should have awaited the Tribunal's final determination on the proceedings before it: cf. Director-General of Social Services v Chaney (1980) 31 ALR 571. However, as I do not consider that the Tribunal erred in the ruling which is in dispute, it is unnecessary to form a final view on this issue.

Budget Impasse

16    The Code provides, inter alia:

39. The management structures established in a retirement village must be directed to ensuring that the following principles are adhered to:

(a) resident input into the management of retirement villages is to be facilitated, where desired by residents;

(b) the freedom of decision and action of residents is to be restricted as little as possible;

(c) every resident is entitled to choose the extent to which the resident participates in the affairs of the retirement village.
40. (1) Management must create appropriate structures for resident input, where desired by residents, in consultation with current residents.
(2) Such structures must allow the following:

(a) for residents to be provided with the audited accounts of actual expenditure against budget within 4 months of the end of each financial year;

(b) for residents to have input into and agree to the budget for each financial year;

(c) for residents to have input into and agree to any change to services or facilities which may involve increased costs to residents (beyond those agreed to in the retirement village's budget);

(d) for residents to have input into and agree to any change to services or facilities which may lead to loss of amenity by the residents;

(e) for residents to have input into and agree to proposals for the upgrading of buildings, fixtures or fittings where the residents are financing either the whole, or part of, the capital or recurrent costs of the work.

41. (1) Management must supply residents with information on financial performance in the current financial year together with a draft budget for the coming financial year within a reasonable time prior to the beginning of the relevant financial year.
(2) The draft budget should contain at least the following:
(a) sufficient information to explain any increase in fees;
(b) information about the costs of services;
(c) a general maintenance workplan;
(d) where appropriate, details of any upgrading or expansion of facilities and changes or additions to existing services.
(3) The final budget must be developed out of consultations between management and residents.
(4) Village management must operate the village on the basis of the last approved budget until any proposed budget has been the subject of reasonable consultation and has been agreed to by the residents of the village.

17    On 11 June 1999, Pannell Kerr Forster, accountants for Overton, sent a letter to each of the residents which included a draft budget for the year 1 July 1999 to 30 June 2000. The letter stated, inter alia:

"Please consider the attached budget document.
Your input into the budgetary process is at your discretion. Under the Code of Practice Clause 39(c) 'every resident is entitled to choose the extent to which the resident participates in the affair of the retirement village'.
Should you decide not to participate it must therefore be assumed that you are comfortable with the proposed levies and you are therefore in agreement with the budget.
Should you wish to participate in this process a query sheet and envelope for your reply is enclosed to facilitate your individual input. Village staff will accommodate your photocopying requirements and your sealed envelope should be deposited in the mailbox provided at the Village reception.
Wherever possible we will endeavour to deal with your queries by contacting you personally, on the matters raised in your query sheet.
Once the queries have been resolved you will then be asked to indicate your agreement to the proposed budget. Any continued disagreement to the budget will therefore need to be supported by appropriate grounds for withholding agreement attributable to specific line items contained in the draft documents.
Proposed amendments to the draft budget, as a result of consultation with the residents will be circulated for the agreement of all residents. The intended outcome of this process is a finalised budget document for the purpose of levying contributions from 1 July 1999.
To facilitate this time frame your response is required within 14 days. Any reply not received by 30 June 1999 will be assumed to be in agreement."

18    That letter was responded to by letters from Mr Carnegie, in his capacity as Secretary of the Residents' Committee. In a letter of 12 June 1999, Mr Carnegie said, inter alia:

"The residents have consistently voted that the Residents Committee shall be responsible for negotiating a budget with the Manager. A Residents' Meeting will be called to discuss your proposal but we feel the structure proposed by you for input into the budgetary process will not be acceptable to them. The complexity of the budget and the constant reference to the various provisions of the lease makes it incomprehensible to 80 and 90 year old residents who have little faith in a system which keeps seeking more money than they were told by the Company and its servants on entry to the Village. …
We will write further when the residents have considered your proposal. The Manager does not permit the residents to meet on site and the date of the meeting will depend on the availability of an outside location. There are only 12 working days left between the date of receipt of your letter and 30 June and by the time we obtain a hall and notify the meeting date to the residents, not many days will be left before 30 June for the negotiating process."

19    On 23 June 1999, the solicitors for Overton advised a partner of Pannell Kerr Forster, inter alia, that:

"The Residents Committee is not a recognised structure for the purpose of providing input to management or properly formed in accordance with the terms of the Trust Deed for consultation. The structure created by the manager does not permit the Residents Committee to provide the opinion of the residents as a whole or of any one of them.
Your letter to the residents and your retainer on balance defines the structure created by management pursuant to clause 40 of the Retirement Village Industry Code of Practice 1995 (the ' 1995 Code '). The structure created permits only for individual input to budget consultation, where desired by residents."

20    On 29 June 1999, a letter on the letterhead of the Residents' Committee but signed by eighty-one residents, said, inter alia:

"The current management has not created a structure for input in consultation with the residents. The current management has not held a meeting of lessees since 1994. The Advisory Committee is not accepted by residents. The Commercial Tribunal found that management's 'inability to procure an agreement from residents on the issues dealt with in cl 40 and 41 of the 1995 Code does not, in the Tribunal's opinion, stem from any unreasonableness on the part of residents. The obtaining of agreement was rendered unachievable by the management approach employed by Mr James'. The Tribunal ordered that the respondent create an appropriate structure for resident input, in consultation with current residents, which allows for residents to have input into and to agree to any changes to services and facilities which may lead to loss of amenity by residents. The position of the residents has not changed."

The letter went on to make detailed observations about particular matters in the draft budget.

21    A letter in response from Pannell Kerr Forster, dated 11 August 1999, was sent to residents. It said, inter alia:

"We were advised by Overton that an appropriate structure to facilitate the consultation process be on an individual resident basis which provided each and every resident the opportunity to voice their own views on the proposed budget. This structure has been created pursuant to clause 40 of the 1995 Code. Overton has advised that it does not recognise the Residents Committee as an appropriate structure for resident's input into the budgetary process.
The structure created by the Manager, and delegated to Pannell Kerr Forster (' PKF '), provides each resident with an opportunity to have input into the budget of the village and agree to the budget for the financial year commencing 1 July 1999, and

supplied to residents, with interim financial information in relation to the financial year ended 30 June 1999, a draft budget for the financial year ended 30 June 2000 within a reasonable time frame prior to the beginning of the relevant financial year and provided residents with a simple framework for questions and responses thereto,

provided the draft budget to residents along with sufficient information to explain any increase in fees, information about costs of services and a general maintenance workplan; and

should allow for a Final Budget to be developed out of consultation with Residents, PKF and the Manager (Overton)."

The letter went on to answer the specific issues which had been raised in the residents' letter. The letter concluded:

"We again attach a personalised 'query sheet' with sufficient space to indicate the line item, amount and details of your query. Please advise your individual comments in relation to the budget line items discussed above and place it in the mailbox provided at the Village Reception for your convenience.
Once these queries have been resolved you will be asked to indicate your agreement to the proposed budget. Any continued disagreement to the budget will therefore need to be supported by appropriate grounds for withholding agreement attributable to specific line items contained in the draft budget.
In the event you have no further questions, you may indicate your agreement to the budget by signing the attached query sheet in the space provided and placing it in the mailbox provided.
To facilitate the agreement of a final budget please provide your individual response on the query sheet provided as soon as possible, preferably by the 31 August 1999."

22    That appears to have been the substance of the negotiations between Overton and the residents. Thereafter, in about August 1999, Mr Carnegie commenced proceedings in the Tribunal.

23 I need not set out the discussion by the Tribunal as to whether or not there was a budget impasse. The Tribunal considered that the structure of consultation established by Pannell Kerr Forster's letter of 11 June 1999 did not necessarily require individual responses but that the later insistence on individual responses to the proposed budget, despite the clear preference of residents for a joint response, failed to comply with the three principles set out in cl 39 of the Code. Therefore, in the view of the Tribunal, the budget consultation process was not carried out under the Code and s 14A(2)(a) was not applicable.

24 The Tribunal then went on to consider under s 14A(2)(b) whether there had been reasonable consultation. The Tribunal said, inter alia:

"… I am satisfied that the proposed budget for 1999-2000 has been the subject of reasonable consultation between residents and administering authority. The proposed budget and financial accounts were provided to residents. Although the applicant initially made complaint about the time allowed in which to respond to the proposed budget, residents did in fact raise a long list of budget queries in their response of 29 June 1999. The administering authority fixed the monthly fees in accordance with the proposed budget on 30th June 1999 without regard to the residents' queries. It is clear that at this point the parties had failed to reach agreement and were not prepared to alter their positions on the proposed budget. At the time the applicant commenced the present application I am satisfied that there was a budget impasse within the meaning of section 14A of the Act. The letter of 11 August 1999 from Pannell Kerr Forster does not affect this finding. At the time it was given to residents, the administering authority had fixed the monthly contributions in accordance with the proposed budget and had included a claim for the July 1999 contribution in Local Court proceedings against residents commenced on 30 July 1999. These circumstances establish to my satisfaction, that consultation had ceased and an impasse reached by 1 July 1999.
I am satisfied that at the time of making this application, the parties have been unable to agree on the 1999-2000 budget after reasonable consultation on that budget within the meaning of section 14A(2)(b). I further find that, in the circumstances, residents had a reasonable time to consider the budget. Accordingly, I find that a budget impasse exists in respect of the 1999-2000 budget."

25 Counsel for Overton contended that the Tribunal erred in its interpretation of s 14A(2)(a) of the Retirement Villages Act. He submitted:

"11. Overton contends that the expression 'budget process under any applicable code', contained in s.14A of the RVA, directs attention to whether or not management of the retirement village has created management structures, in regard to resident input into the budget, which purport to comply with the Code. This test is satisfied if no complaint has been made by a resident of a retirement village that the administering authority has contravened the Code under s.78A of the Fair Trading Act 1987 (NSW) ('FTA').
12. Overton fulfilled its requirements under the Code by the creation of the management structures it adopted. …
13. Once it is accepted that Overton had created a management structure to provide information relating to the budget pursuant to clauses 39 and 40 of the Code then s.14A(2)(b) of the RVA can have no effect, as s.14A(2)(b) of the RVA only comes into operation in the event that there are no 'processes' for consultation under clause 40 of the Code."

Counsel also contended that s 14A(2)(a) looks to the "mechanism" for consultation, not the actual process of consultation.

26    However, this interpretation is without foundation. In my opinion, when determining whether "all budget consultation processes under any applicable code have been complied with", the Tribunal is entitled to consider the budget consultation processes that have occurred and to assess whether, as a matter of fact, the statutory prescription has been satisfied. There is nothing in the Code which suggests that the administering authority may lay down a legally binding process for consultation or that the process of consultation which actually occurs should be disregarded.

27 Counsel for Overton also contended that the Tribunal did not have jurisdiction to consider whether the structure for consultation which Overton established was a structure which accorded with the Code. Counsel submitted that that matter must be raised in accordance with s 78A of the Fair Trading Act, 1987. I do not accept that view. In my opinion, the Tribunal has jurisdiction to determine such an issue provided that the issue is properly before it. When the question arises in the context of a budget impasse, it can be determined in an application brought under s 14A of the Retirement Villages Act.

28    This discussion perhaps complicates unduly the question which was before the Tribunal. In my opinion, if, in pursuance of the procedures enunciated in cl 40 of the Code, the administering authority has made available to the residents the accounts of actual expenditure, a draft budget and details of the changes and other matters proposed, if there has been consultation on the budget, and if the consultation has concluded, the Tribunal is entitled to conclude, if it thinks fit to do so, that the budget consultation processes under the Code have been complied with. That is because it is the substance of the matter, not the technicalities, that determines the decision. The Code is not to be read as a list of technicalities each of which has specific legal effect.

29 In my opinion, the Tribunal was correct in its findings of fact and, on those findings, was correct in law in its finding that there was budget impasse. I do not necessarily agree with the Tribunal's adoption of para (b) of s 14A(2) rather than para (a). The finding with which I agree, that Pannell Kerr Forster's letter of 11 June 1999 did not necessarily require individual responses, the fact that there was a joint letter signed by eighty-one residents which detailed the comments which those residents and impliedly the Residents' Committee wished to make, the fact that there was a reply to that letter from Pannell Kerr Forster on behalf of Overton and the finding that reasonable consultation had occurred, seem to me to justify a finding that s 14A(2)(a) was satisfied. The ruling of the Tribunal arrives at basically the same conclusion, although by a different route.

30    The Tribunal specifically found that "the actual process of consultation was not in accordance with the code". However, it appears to me that that finding was directed to the point that the budget consultation processes did not achieve the standard which the Code expected and not to the issue as to whether, as a matter of substance, the budget consultation processes under the Code had been complied with, which is a different matter. The Tribunal appears to have dealt with the facts relating to that issue in its consideration of s 14A(2)(b) and in its findings that the budget was the subject of reasonable consultation and that the residents had had a reasonable time to consider it.

31    I agree with the Tribunal that, if Overton set up a structure for consultation which precluded input from the Residents' Committee, that structure did not comply with the provisions of cl 39 of the Code. Where a large number of residents are concerned, it is appropriate that a residents' committee should act on behalf of the residents or some of them, if the residents so wish. Paragraph (a) of cl 39 requires that residents' input into the management of retirement villages is to be facilitated. If residents desire to have an input into management, and to do so through a residents' committee, that is appropriate, as the Commercial Tribunal earlier found. The Commercial Tribunal, in its determination on 19 December 1997, directed Overton to create an appropriate structure for resident input, in consultation with current residents. The Commercial Tribunal made it clear that the existing structure for consultation did not meet the requirements of the Code and that that matter must be addressed. The Commercial Tribunal itself directed that a copy of Overton's quarterly report be provided to the President of the Residents' Committee, thus impliedly approving of the existence of the Residents' Committee.

32    It would seem that Overton is seeking to establish that the letter of Pannell Kerr Forster, which said, "Any reply not received by 30 June 1999 will be assumed to be in agreement”, binds the residents from contending that they did not agree to the budget. That contention is based on the terms of the letter which set out a structure for consultation and the fact that no challenge has been made to that structure by application under s 78A of the Fair Trading Act. In my opinion, it is for the Tribunal to determine whether "the residents in a retirement village fail to agree to a proposed budget". That is a question of fact for the Tribunal. The terms of the structure created by the administering body under cl 40 of the Code and any deeming clause contained therein are relevant factors in the determination of the issue but do not foreclose it.

33    The submissions of counsel for Overton do not challenge the factual findings of the Tribunal that reasonable consultation had occurred, that the residents had been given reasonable time in which to consider the budget, and that the residents had not approved of the budget. Counsel for Overton contended that, "The residents refused to comply with the obligations laid out in the management structure created by Overton; the residents 'opted out' of the consultation process". It is clear that the Tribunal rejected such a view. In my opinion, the Tribunal was correct in doing so. As a matter of fact, the residents did not opt out of the consultation process.

34 In my opinion, there was, in the present case, substantial compliance with the conditions of s 14A(2). Section 14A(2) looks to the situation where there has been negotiation as a matter of substance and a reasonable opportunity for the administering authority and the residents to put forward their views. The section does not require, in my opinion, that the views expressed on either or both sides must have been reasonable. The section does not intend to preclude an approach to the Tribunal because there may be, and in the present case there obviously were, people on one or both sides who were not reasonable.

Natural Justice

35    Counsel for Overton submitted that there was a breach of the rules of natural justice in the finding that any structure which requires the individual residents to negotiate with respect to the budget and which precluded the input of the Residents' Committee would be in breach of cl 39 of the Code. It was submitted that this issue was not raised before the Tribunal.

36    Counsel for Overton submitted that, before the Tribunal, counsel for the residents submitted only that, if the structure proposed in the letter by Pannell Kerr Forster precluded any resident input other than individual responses, then that structure did not comply with the requirements of cl 40 of the Code. Counsel for Overton submitted that cl 39 was not mentioned.

37    It is not in dispute that the issue as to individual input into the budget as against input through a Residents' Committee was an issue raised before the Tribunal. Indeed, it was an issue at the crux of the dispute. Counsel for Overton has submitted, however, that the argument turned merely upon the effect of the word "appropriate" in cl 40 of the Code. In my opinion, the word "appropriate" clearly picks up the provisions of cl 39 which direct that the management structures established in a retirement village must accord with the principles enunciated in paras (a), (b) and (c) of the clause. It seems to me to be quite obvious that the principles enunciated in cl 39 were principles which would guide any decision on the issue raised as to the appropriateness of the structure established by Overton. I cannot accept that Overton did not have a fair opportunity to put its case or that there was any matter in respect to which Overton could have been taken by surprise.

Section 22(7)

38 Section 22(7) of the Residential Tribunal Act requires that, if, at the time when an application is made to the Tribunal, an issue arising under the application is the subject of a dispute in proceedings pending before a court, the Tribunal, on becoming aware of those proceedings, ceases to have jurisdiction to hear or determine the issue.

39    The first comment to be made is that the subsection merely precludes the Tribunal from determining a particular issue which is the subject of litigation in a court. It does not preclude the Tribunal from otherwise proceeding with the application before it.

40 At the time when the proceedings were lodged with the Tribunal, there were proceedings on foot. Proceedings in the Federal Court of Australia raised issues of misleading and deceptive conduct, negligent advice, fraudulent misrepresentation, estoppel and unconscionability. None of those issues was before the Tribunal. It was submitted by counsel for Overton, however, that the Tribunal was bound by s 14A(4) to ensure that its determination accorded with the contractual obligations of the administering authority to provide services and facilities. Counsel submitted that in the application or applications before the Federal Court, that Court might, relying upon the provisions of s 87 of the Trade Practices Act, 1974 (Cth) and of the Contracts Review Act, 1980 and the principles of unconscionability, order that the contractual arrangements between Overton and the residents be varied.

41 The Tribunal is bound to ensure that its determination accords with the contractual obligations of the administering authority as at the time it makes its determination. If orders of the Federal Court vary the residents' contracts prior to the making of the determination, the Tribunal must take that fact into account. Any variation that might be ordered at some later period will be irrelevant to its determination. The Tribunal will be able to make an order under s 14A which does not involve any issue before the Federal Court. If the Tribunal is asked to determine an issue which is before the Federal Court, then, of course, s 22(7) will apply.

42    Counsel for Overton submitted that facts adduced in evidence before the Tribunal might also be adduced in evidence before the Federal Court. However, that point does not demonstrate that there is any issue in the Federal Court proceedings which would be an issue before the Tribunal.

43    At the time the proceedings were commenced in the Tribunal, an appeal to the Court of Appeal from the first decision of Windeyer J was on foot. His Honour had made orders as to the outgoings payable from residents up to 15 May 1998. Counsel for Overton contended that the Tribunal, in addressing the costs of operating The Heritage Retirement Village, must necessarily revisit the determination made by Windeyer J. The Tribunal, in its ruling on jurisdiction, held that the costs of operating a village were a different issue from the issue with which the Supreme Court was dealing, namely, the amount of contributions payable by residents under their leases up to 15 May 1998. I agree with that view. The issues raised in the Court of Appeal were not issues which were raised in the proceedings before the Tribunal.

44    A similar position applies with respect to the proceedings which had been commenced in the Local Court. In those proceedings, Overton sought to recover contributions said to be due by Mr Carnegie in accordance with his contractual obligations. Mr Carnegie's cross-claim raises many issues for consideration. However, none of the matters to be resolved in the Local Court appear to be matters to be decided by the Tribunal.

45 Section 22(7) will continue to apply, notwithstanding the interim determination of the Tribunal. If at any time it becomes apparent that there is an issue in the proceedings which was also before a court at the time when the application was lodged with the Tribunal, then the Tribunal will cease to have jurisdiction to determine that issue. However, I see no error in the Tribunal's finding on the material before it that there was no such issue.

Conclusion

46    For these reasons, I am of the view that the application before the Court should be dismissed with costs.

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Last Modified: 09/26/2000