Pines Management (ACT) Pty Ltd v Eastick and Ors (Retirement Villages) - [2017] ACAT 109

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

PINES MANAGEMENT (ACT) PTY LTD v EASTICK AND ORS (Retirement Villages) [2017] ACAT 109
RV 1/2017
Catchwords: RETIREMENT VILLAGES – meaning of ‘operator’ for the purposes of the Retirement Villages Act 2012 – application for approval of amendments to the recurrent charges payable under a village contract – matters to be considered when determining whether to approve, with or without modification, a proposed amendment of recurrent charges – Tribunal approval of proposed annual budget – no orders as to costs

Legislation cited: Retirement Villages Act 2012 ss 7, 116, 135, 137, 141, 143, 145, 150, 154, 159, 162, 163, 164, 166, 167, 168, 169,181, 260
Retirement Villages Act 1999 (NSW) ss 116

Subordinate
Legislation cited: Retirement Villages Regulation 2013 ss 24, 38, 32

Cases cited: AB Hunt v Kurrajong Village Pty Ltd [2006] NSWCTTT 125

Alloura Waters Retirement Village Residents Committee v Living Choice Australia Pty Ltd [2014] NSWCATCD 68
Beattie v Wesley Mission [2017] NSWCATAP 12
Carey Bay Retirement Village Residents Committee v Anglican Care (Retirement Villages) [2011] NSWCTTT 497
Deahm v The Fairways Partnership (Retirement Villages) [2011] NSWCTTT 232
Queens Lake Village Pty Ltd v Queens Lake Village Residents Association [2011] NSWDC 21
Sakkara Investment Holdings Pty Ltd atf Sakkara Landings Trust v Residents Committee of the Landings Retirement Village [2016] NSWCATAP 52
Sakkara Investment Holdings Pty Ltd atf Sakkara Landings Trust v Residents Committee of the Landings [2017] NSWCATCD 29
The Residents Committee of the Landings v Sakkara Investment Holdings Pty Ltd atf Sakkara Landings Trust [2015] NSWCATCD 113

Tribunal: Presidential Member G McCarthy

Date of Orders:  18 December 2017
Date of Reasons for Decision:         18 December 2017
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL       )          RV 1/2017

BETWEEN:PINES MANAGEMENT (ACT) PTY LTD
Applicant

AND:EASTICK and those parties listed in schedule 1[1]
[1] There were 26 respondents to the application, each of whom is a resident in the subject retirement village. The names of the respondents are at Schedule 1 to these reasons for decision
Respondents

TRIBUNAL: Presidential Member G McCarthy

DATE: 18 December 2017

ORDER

The Tribunal orders that:

The approved spending of Pines Management (ACT) Pty Ltd for the financial year ending 30 June 2018 be in accordance with the annual budget at annexure A to this order.
The matter will be listed for further hearing in mid-January 2018 on the following questions
(a)amendment to the recurrent charges payable by the residents; and
(b)any order as to costs or the payment of money.

………………………………..
Presidential Member G McCarthy
Annexure A

Expenses

2017-2018 Budget

Auditing

3,500

Accounting

0

Bank Fees

150

Legal Fees

0

Fire Appliances Servicing & Monitoring

3,811

Lift Maintenance

4,186

Insurance (Building & Workers Compensation)

12,062

Petty Cash Expenses by Manager

1,000

Cleaning

5,824

Gardening

1,300

Repairs & Maintenance

300

Capital Maintenance

6,100

Window cleaning

3,600

Pest Spray

1,200

Office Supplies

500

Village Manager

31,200

Rates

6,000

Telephone &Internet

1,600

Electricity

8,300

Water

3,500

Contingencies

1,000

Capital Works Fund

4,000

Total Expenses

99,133

REASONS FOR DECISION

Background

Pines Living Pty Ltd is the Crown lessee of Block 2 Section 9 Farrer, ACT (the land). Pines Living has constructed a nursing home and a retirement village on the land. Approximately one third of the land remains vacant.
The retirement village is comprised of 24 residential accommodation units, six of which remain vacant.
For each unit that is now occupied, Pines Living, as licensor, has entered into an agreement described as a Deed of Loan and Licence (the Deed) with a licensee who, under clause 5.1.1 of the Deed, has obtained a licence to occupy the unit.
Under clause 5.3, the Deed does not give the licensee “any right of exclusive possession to any part of the unit.”
Each licensee has also entered into an agreement with Pines Management Pty Ltd described as a Service Agreement (the Service Agreement). Under the Service Agreement, Pines Management as ‘Manager’ (being the entity appointed by Pines Living to manage and operate the retirement village) is required under clause 3.1 to provide services to the resident (being the applicable licensee under the applicable Deed) “in accordance with the Management Terms” set out in Annexure 2 to the Service Agreement.
Clause 4.3 of the Service Agreement provides for preparation of a proposed “Annual Recurrent Charges Budget”. Clause 5.1 provides for an “Annual Expenditure Budget”. The difference between the two budgets is unclear. They seem to blend the statutory requirements for preparation of an annual budget under Division 7.4 of the Retirement Villages Act 2012 (the RV Act) and the statutory requirements under Division 7.3 of the RV Act for setting the level of recurrent charges payable to fund (wholly or in part) the cost of services to be provided under the annual budget.
Clause 5.11 provides for Pines Management’s right to refer a proposed annual budget to the Tribunal “if the residents do not consent to it within 30 days of being given the proposed Annual Expenditure Budget.” This right reflects Pines Management’s right under section 163(1) of the RV Act to apply to the Tribunal “for an order in relation to the spending proposed for the financial year”, and the Tribunal's power, on receipt of such an application, to make orders, directions recommendations and determinations of liability regarding the proposed budget of the kinds described in section 163(2) of the RV Act.
Whilst not mentioned in clause 5.11 of the Service Agreement, if a resident refuses to consent to the spending in the proposed budget (as occurred in this case) the resident also has the right under section 163(1) of the RV Act to apply to the Tribunal “for an order in relation to the spending proposed for the financial year.”
By application dated 27 June 2017, Pines Management seeks the following orders:
(a)A declaration (or order) under section 154 of the RV Act approving the increase in recurrent charges to $585 per month as set out in the notice to residents dated 12 January 2017.
(b)A declaration (or order) under section 163 of the RV Act approving the annual budget as set out in the notice to residents dated 12 January 2017.
(c)Such further or other orders as the Tribunal thinks fit.
The application is consequent upon 22 of the 23 residents of the retirement village not consenting to the increase in recurrent charges or the proposed annual budget.
The exception was Mr Niranjan Krishan Aggarwal, who is a director and majority shareholder of Pines Living. The other directors of Pines Living are Arun Aggarwal and Ghauri Aggarwal. The other shareholder is Arun Aggarwal.
Mr N K Aggarwal is also a shareholder of Pines Management. The directors are Arun and Mahesh Aggarwal, who also own the balance of the shares in Pines Management.

Who is the operator?

By interim application dated 26 July 2017, the residents sought a determination as to who is ‘the operator’ of the retirement village. The residents submitted that it is Pines Living. Mr Christensen, solicitor for Pines Management, submitted that it is Pines Management.
‘Operator’ is defined in section 7 of the RV Act as follows:
7 Meaning of operator
(1) In this Act:
operator, of a retirement village-
(a) means the person who, alone or with someone else, manages or controls the retirement village; and
(b) includes-
(i) a person for the time being managing or controlling the retirement village; and
(ii) a person (other than a resident or other person mentioned in section 8 (Meaning of residence right) who owns land in the village; and
(iii) a person mentioned in section 15A (1) (d) (Application to residents and operators of former retirement villages); and
(iv) any other person prescribed by regulation; but
Note: Power to make a regulation in relation to a matter includes power to make provision in relation to a class of matter (see Legislation Act, s 48 (2)).
(c) does not include-
(i) the body corporate of a community title scheme or the owners corporation for a units plan; or
(ii) the managing agent of a community title scheme or units plan; or
(iii) any person excluded from this definition by regulation.
(2) If there is more than 1 operator for a retirement village, it is sufficient compliance with a requirement of this Act if-
(a) any of the operators exercises the functions of an operator under this Act; and
(b) any notice or other document required to be given to the operator under this Act is given to any of the operators.
Note 1 A reference to an Act includes a reference to the statutory instruments made or in force under the Act, including any regulation (see Legislation Act, s 104).
Note 2 For how documents may be given, see the Legislation Act, pt 19.5.
(3) In this section:body corporate, of a community title scheme-see the Community Title Act 2001, dictionary. (emphasis added)
As a matter of statutory interpretation, section 7(1)(a) states the meaning of ‘operator’. Section 7(1)(b) describes different kinds of persons who are within the definition of ‘operator’, although the word ‘includes’ contemplates that there may be other kinds of persons who are ‘operators’.
Section 7 must be read as a whole. By doing so, it becomes clear that there can be more than one operator. Section 7(1)(a) - (d) describes different kinds of persons, each of which (or whom) is an operator. Section 7(2) sets out what constitutes sufficient compliance with a requirement of an operator under the RV Act “if there is more than 1 operator”.
In this case, I am satisfied that, for different purposes, Pines Living and Pines Management are operators of the retirement village. They can, and do, perform different statutory functions required of an operator. For example, Pines Living fulfilled (so far as I can ascertain) the obligations of ‘the operator’ under sections 23, 24 and 25 of the RV Act.
Meanwhile, relevant for the purposes of the interim and substantive applications to the Tribunal, I accept Mr Christensen’s submission (by reference to the Service Agreement) that Pines Management is ‘the operator’ for the purposes of the rights and obligations of the operator under Divisions 7.3 and 7.4 (sections 147-167) of the RV Act.
The parties referred me to the Disclosure Statement at Annexure 4 to the Deed and the reference in the third line of the document to Pines Living as the “Operator's Name”.
Mr Christensen, referring to a letter dated 23 May 2017 from Mr NK Aggarwal for and behalf of Pines Living, submitted that the statement in the Disclosure Statement was an obvious error. He said that the operator “is, and always has been, Pines Management” and that “a retirement village cannot have two operators.” He supported Mr Aggarwal's position that each resident should “check contract document, and amend the above error” (sic).
Ms Carscadden on behalf of the residents disputed that it was an ‘error’. She submitted that the document clearly names Pines Living as the operator, that the Disclosure Statement at Annexure 4 to the Deed should be given effect and that it is quite wrong for anyone including the residents to change a contract by ruling out one name and inserting another.
I am not persuaded that the naming of Pines Living as the operator for the purposes of the Disclosure Statement is incorrect. The only services to be provided by “the operator” under the Disclosure Statement are the personal services listed in paragraph (l) of the Statement. Whilst that appears unlikely, it does not affect the independent obligation of Pines Management to manage the retirement village under paragraph (d) of the Disclosure Statement, and the independent obligation on residents to enter into a Service Agreement with Pines Management prior to taking up residence.
Pines Management's obligations under the Service Agreement cause it to be an operator for certain purposes of the RV Act irrespective of the fact that it is not named as such in the Disclosure Statement or whether Pines Living is also an operator for other purposes including for the purpose of providing the services described in paragraph (l).
For these reasons, in my view Mr NK Aggarwal's statement that “a retirement village cannot have two operators” is incorrect.

Approval of the proposed annual budget

I turn to Pines Management’s substantive application for approval of the proposed annual budget. The document put forward as the proposed annual budget stated:

2017-2018 Budget	Audited Income & Expenses 1 July 2016 to 30 June 2017
Income
Recurrent Charges for 24 Units	168,480	149,944
Expenses
Auditing	3,500	3,182
Accounting	3,5000	3,749
Bank Fees	150	140
Legal Fees	9,000	0
Fire Appliances Servicing & Monitoring	6,300	3,436
Lift Maintenance	4,700	3,805
Insurance (Building and Workers Comp)	13,492.43[2]	15,393
Petty Cash Expenses by Manager	1,000	72
Maintenance, gardening & repairs
Cleaning	4,800	4,274
Gardening	7,500	7,202
Repairs & Maintenance	20,500	18,061
Capital Maintenance	12,000	6,896
Window cleaning	2,000	0
Pest Spray	1,200	984
Office Supplies	500	0
Village Manager	64,000	61,547
Rates	14,000[3]	13,772
Telephone & Internet	2,400	1,731
Electricity	7,500	8,530
Water	4,200	2,899
Contingencies	2,500	0
Capital Works Fund	4,000	0
Total Expenses	188,742.43	155,673
Net Profit/(Loss)	(20,262.43)[4]	(5,728)

[2] By letter dated 3 October 2017, Mr Christensen, solicitor for Pines Management sought an increase in the budgeted amount from $12,425 to $13,492.43 for reasons explained in my consideration of the claim for insurance

[3] At hearing, Mr Christensen explained that the proposed figure of $6,500 was an error as explained in my consideration of the claim for rates

[4] The proposed net loss increases to $20,262.43 once the proposed increases to the budgeted amounts for insurance and rates are included

The parties agreed that I consider each proposed expense item in turn, save for bank fees, petty cash, window cleaning, pest spray and office supplies which the residents accepted as appropriate sums to be included in the budget.

Auditing fees

The claim for auditing fees ($3,500) typified the residents’ primary complaint about so many of the items in the budget: Pines Management has not disclosed to them any information or at least sufficient information to enable the residents to understand the basis for the proposed expenditure and/or why that expenditure is necessary and/or reasonable.
In my view, the residents’ entitlement to such information is apparent. It is, with respect, the most basic proposition that if a person or persons (and in this case the residents of the retirement village) are being asked to pay for an item of proposed expenditure, there should be full disclosure, on request, of any details regarding that proposal to enable the residents to form a considered view about it, whether it is reasonable and whether alternatives should be explored.
Such disclosure is also a statutory obligation. Section 162(4) of the RV Act states:
(4) The operator must give any information in relation to the proposed spending that the residents committee for the retirement village (or, if there is no residents committee, a resident) reasonably asks for, for deciding whether to consent to the budget.
The RV Act is modelled on, and in substance repeats, the Retirement Villages Act 1999 (NSW) (the NSW Act). The Retirement Villages Regulation 2013 (the RV Regulation) is likewise modelled on the Retirement Villages Regulation 2009 (NSW) (the NSW Regulation) although the NSW Regulation has since been overtaken by the Retirement Villages Regulation 2017 (NSW).
Case law commenting upon the operations of the NSW Act and NSW Regulation is therefore relevant for present purposes.
In Queen’s Lake Village Pty Ltd v Queens Lake Village Residents Association,[5] Levy SC DCJ of the District Court of NSW said:
61. In a case where the residents have refused to consent to proposed items of budgetary expenditure, on the application of an operator or a resident, the CTTT is invested with wide powers: s 115(2)(a)-(i) of the RV Act. Again, those powers are discretionary in their application, and not mandatory. In particular, in the determination of a relevant dispute, the CTTT is given a discretion to make an order that the operator should remain liable for so much of the proposed expenditure as was considered by the CTTT as being not reasonable or not necessary to pass on to the residents: s 115(4) of the RV Act . In making any determination under this section, the CTTT was given a wide discretion to have regard to " any other relevant matter ": s 115(6) of the RV Act .
62. I construe the references to " any other relevant matter " in ss 115 and 108 of the RV Act , to be read subject to the rules of procedural fairness, which, in this context, requires that appropriate notice be given to the affected party, and for that process to be applied, transparent evidence should be available in respect of any such matters to be considered in that regard. These conferred discretions are wide in their nature and effect. Accordingly, the exercise of such discretions must proceed according to recognised principles of fairness to the persons affected: House v The King [1936] HCA 40; (1936) 55 CLR 499.
..
72. In the context of this case, a purposive and business efficacy approach requires a balanced approach where acknowledgment must be given to the predominant features that contain compliance codes and limiting circumstances for the financial exposure of residents, purposively aimed at consumer protection. In my view, the fairest manner in which these objectives are met is for determinations and interpretations to proceed transparently on identified facts in evidence.
[5] Queen’s Lake Village Pty Ltd v Queens Lake Village Residents Association [2011] NSWDC 21 at [61] – [62] and [72]
In Carey Bay Retirement Village Residents Committee v Anglican Care (Retirement Villages) the tribunal likewise noted the importance of transparency and objective evidence in support of an amount in a proposed budget.[6]
[6] Carey Bay Retirement Village Residents Committee v Anglican Care (Retirement Villages) [2011] NSWCTTT 497 at [36] – [38]
Pines Management’s claim for auditing fees is a good example of poor transparency. The residents’ primary complaint was that they had not received copies of any tax invoices or other evidence for audit fees. It was not until the hearing of Pines Management’s application to the Tribunal that they received a tax invoice from Mr John Beard, registered company auditor, for his fees of $3,500 for auditing the accounts and financial statements for Pines Management for the year ended 30 June 2017.
Mr Beard gave evidence at the hearing by telephone. He explained that in order to do the audit he drew up an audit plan, interviewed Pines Management’s employee manager of the retirement village (Mr Binto Valiakalayi) who performs the role of bookkeeper in relation to the retirement village, examined the records that Mr Valiakalayi kept on the MYOB files and corrected his mistakes. Mr Beard explained that he was now semi-retired, working from home, and that his fee was approximately 50% of the market rate for doing an audit of this kind.
I have concluded that the budget expense of $3,500 for auditing fees is reasonable. At the hearing, the residents agreed – having received a copy of Mr Beard’s invoice.

For this item in the budget, I allow $3,500.

Accounting fees

By email sent on 11 August 2017, two months after Pines Management applied to the Tribunal for approval of its budget, Mr Valiakalayi informed the residents that Pines Management’s accountant is Manv Accountants Pty Ltd.
Mr NK Aggarwal is a director and a majority (at least) shareholder of Manv Accountants Pty Ltd. Pines Living, Pines Management and Manv Accountants Pty Ltd have the same business address.
The residents submitted that Manv Accountants has a conflict of interest in charging Pines Management for accounting services where Mr NK Aggarwal is a director and shareholder of Manv Accountants, a director and shareholder of Pines Management and is also a resident at the retirement village.
I accept that Manv Accountants has a conflict of interest, but in my view it does not preclude Manv Accountants from providing accounting services to Pines Management. The conflict can be managed by Manv Accountants providing full disclosure of the work done (or proposed to be done) and the fees charged (or proposed to be charged) in order to evidence that the work has been (or will be) done at market rate, or better, and at arm’s length.
However, despite my invitation to do so, Mr Christensen did not produce any evidence of any accounting services provided by Manv Accountants to Pines Management or that Pines Management had incurred any accounting fees payable to Manv Accountants in relation to the operation of the retirement village.
Mr NK Aggarwal was obviously the person best placed to give evidence about the accounting fees proposed in the budget. Mr Aggarwal attended the Tribunal hearing, but Mr Christensen explained he had made a “forensic choice” not to call Mr Aggarwal to give evidence.
As noted in Queen’s Lake Village, determinations need to proceed “transparently on identified facts in evidence”. There being no evidence to support the proposed expenditure on accounting fees, I disallow the claim.

Legal fees

Mr Christensen submitted that an allowance for legal fees should be made as a contingency against the possibility of such fees. Despite my invitation to do so, he did not point to any likelihood of such fees being incurred, or the kind of legal services that might be required or why $9,000 was an appropriate sum to include in the budget.
An allowance for “contingencies” is already made in the proposed budget, to which I later refer. If the need for legal services arises, the budget can be amended (with the consent of the residents) according to that need and the likely cost of those services. Section 167 of the RV Act provides for amendment of an approved budget, and permits the Tribunal to make an order for further spending if that further spending is appropriate, needed urgently and was not reasonably foreseeable when the budget was approved.
The residents expressed concern that the budgeted legal fees would be spent by Pines Management on the engagement of a solicitor to assist with its application to the Tribunal for approval of the proposed budget. The residents described it as “unconscionable” that they should be required to fund Pines Management’s claim against them.
The residents’ concerns were justified. By email sent on 1 December 2016, Mr Valiakalayi wrote to the residents as follows:
After discussions with the management, I have been instructed to engage a solicitor and lodge an application with the Tribunal, possibly for increasing the recurrent charges $229 per week, for all the residents, effective from 01 December 2016. Legal costs for the above are estimated at about $8000. These will have to be paid by the levies as management expenses.
Section 260(1) of the RV Act states:
(1) The residents of a retirement village are not liable to pay any costs the operator of the village incurs or expects to incur in obtaining legal advice, or undertaking a legal proceeding, in relation to the village unless—
(a) the costs appear in the approved annual budget for the village; or
(b) section 52 (Costs of preparation of village contracts) applies.
It seems tolerably clear that Pines Management sought to include $9,000 in the annual budget, in accordance with section 260(1)(a) of the RV Act, in order to require the residents to fund Pines Management’s action in the Tribunal against them. Mr Valiakalayi confirmed that to be so in his witness statement at paragraph 9.
Where the residents have refused to consent to the inclusion of legal fees in the proposed annual budget, the Tribunal may order those costs to be included in the budget under section 260(2) of the Act which states:
(2)If the residents refuse to consent to the inclusion of the costs as an item in a proposed annual budget, the ACAT may, on application by the operator under section 163 (ACAT orders—decisions about spending), order spending on those costs if the ACAT decides that—
(a)the legal advice or proceeding is wholly in the interest of the residents; and
(b)the costs are reasonable in the circumstances.
I am not persuaded that it is “wholly in the interest of the residents” that Pines Management obtain funding for legal fees from the residents via the annual budget to fund its action against them, especially where (in my view) approximately half of the proposed expenditure in the proposed annual budget should not be allowed.
I disallow the claim for legal fees.

Fire appliance servicing & monitoring

The proposed annual budget proposes an increased in the costs for fire appliances servicing and monitoring from $3,436 to $6,300.
The residents accept, in principle, that the costs of servicing and monitoring the retirement village’s protection systems is an appropriate expense to include in the budget. Their objection arises from a lack of transparency regarding the services provided and the costs.
The objection is properly made.
If Pines Management wishes to set a figure in a proposed budget for an item of expenditure it needs to be based on evidence, whether that be tax invoices from previous years, quotations for proposed expenditure and the like. It is the residents’ money, not the operator’s, that is to be spent. It is implicit from that proposition that the residents have a right to such details as they request regarding proposed expenditure, to object to expenditure and to suggest alternative expenditure.
Mr Valiakalayi, in his witness statement, provided tax invoices from Form1 Fire Protection - Canberra Pty Ltd for its monthly fire equipment testing service and from Romteck Grid Pty Ltd, which provides a notification service to the fire services (presumably the ACT Fire Brigade) in the case of a fire. Form1 charge a monthly fee of $185. Romteck Grid charge a quarterly fee of $397.73. Together, the evidence suggests annual costs for fire equipment and monitoring of $3,811.
At the hearing, Mr Christensen provided a quote dated 29 August 2017 from Form 1 for $2,108.70 for rectification of defects concerning doors in the retirement village.
I am not persuaded that an allowance for that amount should be made in the budget for fire appliance servicing and monitoring. The quote is not concerned with fire appliance servicing and monitoring. It is for the supply and installation of a plastic sign that was damaged or missing ($192) and for the supply and installation of new door seals “due to excessive door clearances”. The latter issue is not a cost that should be included an annual operating budget. It is a capital cost to fix a defect in the construction of the doorways in the retirement village.
Where the retirement village is owned by Pines Living, the cost of correcting defects in the construction of the building should be paid by that company, even if it seeks reimbursement from the contractor who installed the doors in the course of construction.
For this item in the budget, I allow $3,811.

Lift maintenance

In support of the claim for lift maintenance, Mr Valiakalayi provided a tax invoice from Kone Elevators Pty Ltd for $1,046.46, being a quarterly invoice for, I was told, its fixed-price service fee for maintaining the lift. This equates to $4,186 per annum.
Mr Valiakalayi did not provide any basis for why the proposed budget should allow instead $4,700, particularly where Kone Elevators (I was told) charge a fixed price for maintaining the lift regardless of the work involved in doing so.
For this item in the budget, I allow $4,186.

Insurance

The claim for insurance ($12,425) was another claim where the residents objected primarily because Pines Management would not give them a copy of the insurance policy or policies or explain the coverage or how the premiums were calculated despite their requests.
The respondents accepted that premiums and charges associated with insurance for the retirement village should be included in the budget, but could not comment on the amount in the proposed budget because they did not have sufficient information.
Under section 162(4) of the RV Act, the policies and details about the premiums should have been provided to the residents long ago, yet at hearing on 27 September 2017, Mr Christensen could not provide relevant details regarding the policies or their coverage in order to substantiate the allowance in the proposed annual budget. I gave him leave to obtain and provide the necessary documents after the hearing.
In their correspondence after the hearing, after considering the policies provided by Mr Christensen, the residents expressed their concern about what “exactly” is covered under the policy, and in particular whether they are covered for alternative temporary accommodation should the retirement village become uninhabitable. Ausure would not provide details to the residents because they are not the owner of the policy. I can understand Ausure’s position, but Pines Management should have provided these details to the residents.
I understand the residents’ frustration, but have concluded that the appropriateness or sufficiency of an insurance policy or policies beyond that required under the RV Act is not a matter that I can appropriately consider. I have no evidence about the cost or appropriateness of such extended coverage. The Tribunal’s function is to review the proposed amount for insurance by reference to the evidence before me.
Under section 145(3) of the RV Act, Pines Management must have insurance to cover damage, costs incidental to the reinstatement or replacement of the insured buildings and public liability insurance. As best I can ascertain, policies to provide that insurance have been obtained. Under section 145(3), premiums to obtain that insurance can be funded from recurrent charges if included in the approved annual budget.
Regarding building and contents insurance, Ausure Pty Ltd provided a tax invoice dated 24 August 2017 for renewal of Pines Living’s policy for an amount of $32,654.78.
By letter dated 27 September 2017 (the day of the Tribunal hearing), Ausure wrote to Mr NK Aggarwal giving details about the components giving rise to the total premium amount. It noted the total insured asset value of the nursing home at $24,525,000, and the total insured asset value of the retirement village at $8,325,000.
Ausure noted its renewal premium at .085%, being $20,846.25 for the nursing home and $7,076.25 for the retirement village. To that was added a terrorism levy of $1,563.66 applicable to both properties, GST of $2,948.62 and a broker fee of $200 plus GST ($20) to a total of $32,654.78.
Regarding the public liability policy, in its letter dated 27 September 2017 Ausure noted the total premium was $11,000 plus GST plus a broker fee of $200 plus GST ($20) to a total of $12,320. Ausure did not provide any apportionment of the policy between the nursing home and the retirement village.
The total of the premiums for both policies is $44,974.78.
Mr Christensen submitted that 30% of the total premium, that is $13,492.43, should be approved in the annual budget for insurance. This appears to be based on the fact that the total insured asset value of the retirement village is approximately 30% of the total insured value of both assets.
I reject the submission.
30% of the total premium skews the apportionment in favour of Pines Management because 30% of the premium attributable to the asset value of the nursing home - ($6,254) - is more than 70% of the premium attributable to the asset value of the retirement village - ($4,953).
In my view, the amount to include in the budget should be the amount attributable to insuring the retirement village as best as it can be calculated.
The amounts therefore payable for building and contents insurance are $7,076.25 plus GST ($707.62), 30% of the terrorism levy ($469.10) plus GST ($46.91), 30% of the broker’s fee ($60) plus GST ($6) to a total of $8,365.88.
For public liability insurance, a breakdown has not been provided and perhaps cannot be provided given the nature of the policy. I therefore allow 30% of the premium ($3,300) plus GST ($330) 30% of the broker’s fee ($60) plus GST ($6) to a total of $3,696.
For this item in the budget, after adding the two total amounts, I allow $12,062.

Cleaning

Mr Valiakalayi provided evidence that Pines Management:
(a)employs a cleaner who charges $25 per week;
(b)engages Cut Price Trash Paks who provide a monthly Trash Pak Pick Up Service at $6.23 per week; and
(c)engages Suez Recycling and Recovery who collect dry general waste and comingle containers at a cost of $19.80 and $18.80, respectively, per week.
At hearing, Mr Christensen provided tax invoices from the cleaner which, he submitted, evidence that the cleaner spends between four and six hours per week providing cleaning services, primarily vacuuming and mopping the common areas. I am satisfied that Mr Valiakalayi intended to say in his statement that the cleaner charges $25 per hour, not per week, but the invoices provided in evidence were rendered fortnightly, not weekly, for between four and six hours of cleaning.
The residents submitted that the trash pack service is not required, and so should be deleted from the proposed budget.
For budget purposes, by reference to the cleaner’s tax invoices, I allow 2.5 hours per week for cleaning ($62.50), together with the Trash Pak and Suez weekly costs. I can see no reasonable basis to delete the trash pack service. I calculated total weekly cleaning costs of $112, meaning an annual amount of $5,824. Although the respondents agreed to the proposed budget sum of $4,800, that amount seems insufficient.
I see no reason not to increase the approved amount for cleaning to $5,824, particularly where, under section 166(1) of the RV Act, it would be a strict liability offence for Pines Management to spend money allocated to cleaning otherwise than on cleaning costs as approved in the annual budget, unless Pines Management can establish that the expenditure was in accordance with the exception under section 166(3).
Section 166 of the RV Act provides:
166    Spending otherwise than in accordance with approved annual budget
(1)     The operator of a retirement village commits an offence if—
(a)    the operator spends money received for recurrent charges for a financial year for the village; and
(b)    the spending is not in accordance with—
(i)   the approved annual budget; or
(ii)   the approved annual budget as amended under section 167 (Amendment of approved annual budget).
Maximum penalty: 50 penalty units.
(2)     An offence against this section is a strict liability offence.
(3)     Subsection (1) does not apply if the spending—
(a)    was a change in spending between items in the approved annual budget; and
(b)    does not reduce the level of services the retirement village provides; and
(c)    does not cause the total spending provided for by the approved annual budget to be exceeded.
Note The defendant has an evidential burden in relation to the matters mentioned in s (3) (see Criminal Code, s 58).
(4)     Subsection (5) applies if the operator of a retirement village—
(a)    commits an offence under subsection (1); or
(b)    does not comply with an order under section 161 (ACAT order—proposed annual budget)) to give the residents of the village a proposed annual budget in relation to a current financial year for the village.
(5)     A resident of the retirement village may apply to the ACAT for (and the ACAT may make) an order directing the operator to refund the recurrent charges paid by the resident during the financial year until the day when the order is made.
In The Residents Committee of the Landings v Sakkara Investment Holdings Pty Ltd T/As Sakkara Landings Trust[7] the New South Wales Civil and Administrative Tribunal (the NCAT) commented on section 116 in the NSW Act, which is the statutory equivalent of section 166:
74 In my opinion, having regard to the requirement under section 114 for the operator of a retirement village to seek consent of the residents of the village to the expenditure itemised in the proposed annual budget, coupled with the provisions of section 116(3) which provide that the operator must not expend money received by way of recurrent charges otherwise than in accordance with the approved annual budget or any amendment thereof, prima facie if an amount itemised in a proposed annual budget to which the residents have consented is not spent in accordance with that budget, and the provisions of s 116 (3A) do not apply, then the residents are entitled to have that amount refunded to them.
[7] The Residents Committee of the Landings v Sakkara Investment Holdings Pty Ltd T/As Sakkara Landings Trust [2015] NSWCATCD 113 at [74]
In the case of cleaning, it is difficult to envisage that the exception under section 166(3) could apply because expenditure of money allocated for cleaning on a different item in the approved annual budget would invariably reduce the level of cleaning, and thus the level of services provided by the retirement village to the residents.
Also, if Pines Management sought to spend money allocated to cleaning on any other item (in the same way that if it sought to spend money allocated to an item otherwise than in relation to that item), the onus would be on it to prove on the balance of probabilities that the exception under section 166(3) was satisfied.[8]
[8] Sakkara Investment Holdings Pty Ltd as trustee for Sakkara Landings Trust v The Residents Committee of the Landings Retirement Village [2016] NSWCATAP 52 at [104] – [107]
For this item in the budget, I allow $5,824.

Gardening

Pines Management seek approval for $7,500 for gardening, and rely upon invoices from Jakes Complete Garden Care (Jakes) for expenditure on gardening, waste removal, pruning, lawn mowing, planting and hedging from 2 January 2016 to 5 May 2017. For the calendar year 2016, these invoices totalled $5,825.
The respondents object to the proposed budget sum on the grounds that the only gardening done on the land occupied by the retirement village is trimming of hedges and blowing leaves from the main open areas. They said that the mowing (and apparently other garden maintenance) is done on the large area of vacant land, approximately 6,072m², adjoining the retirement village.
I had very little information about the work done. Mr Valiakalayi attached the invoices to his witness statement but did not comment about them. No one from Jakes gave evidence about where the work was done or what was done, and the residents stated that when they telephoned Jakes on 18 September 2017 to obtain information about the invoices they were told that Jakes was under instruction “not to give any information whatsoever”.
In my view, Jakes’ work to maintain the vacant land has no connection with maintaining the grounds at the retirement village. The retirement village has no more connection with the vacant land than it does with the nursing home. To maintain the vacant land is an entirely independent cost incurred by Pines Living in its capacity as the Crown lessee.

Mr Christensen submitted that maintaining the vacant land should be included in the annual budget because the residents could walk upon the vacant land and enjoy it as part of their leisure activities. I reject the submission. A photograph produced in evidence of the vacant land shows it to be an entirely uninviting bare area devoid of any aesthetic appeal.
The question arises as to what portion of Jakes’ gardening invoices should be allocated to gardening work conducted on the grounds of the retirement village. The residents submit that there is no garden, save for the hedges and some trees. The photograph of the hedges shows them to be individual bushes, still in a very immature state, yet to develop into a hedge at all. Mr Valiakalayi said that maintenance of the retirement village garden was largely the effort of the residents.
I have concluded on the evidence that Jakes is primarily engaged to maintain the vacant land, and does a small amount of additional gardening work in the retirement village when required and when already on site. The invoices show an hourly rate of $130 per hour, which I presume to include overhead costs of equipment and fuel, particularly for a large open ground tractor style mower. None of that equipment, would be required to trim plants in the retirement village.
For the modest (and remaining) gardening needs of the retirement village, a gardener would need to attend at most once a fortnight. Doing the best I can, I allow $50 per fortnight. For this item in the budget, I allow $1300.

Repairs & maintenance

Pines Management seeks approval of $20,500 in the budget for “repairs and maintenance”. The notes to the amended budget, at note 5b, state that this claim for “other maintenance” (meaning other than capital maintenance) is comprised of $9,000 for a “maintenance contractor”, $4,000 for “materials”, $2,500 for a “painter”, $2,500 for “rubbish management” and $2,500 for “others, including possible tree lopping”.
Despite this breakdown, the Tribunal received very little (if any) evidence to support the claim.
Mr Valiakalayi stated that “there is no pattern to the need for maintenance”. That may be so, but I expected at least some evidence of past maintenance costs (separate from evidence for separate claims for lift maintenance and capital maintenance) to provide some basis for a proposed budget for future “other maintenance” costs. As mentioned, Pines Management must proceed transparently on identified facts in evidence.
Mr Valiakalayi provided tax invoices with his statement concerning repairs and replacements carried out during the financial year ended 30 June 2017. However, in my view, all those invoices relate to replacement or repair of capital items, save for a callout fee of $115 for a resident who was locked out of their residence which is not repair or maintenance at all. I therefore deal with these items under the separate claim for capital maintenance.
Referring to the items in note 5b, I had no evidence regarding a “maintenance contractor”. I had no evidence as to whether this related to a particular contractor who has provided general services over a 12 month period, or a proposed contractor for the budget period or a global amount for contracted maintenance services provided or to be provided by different maintenance contractors from time to time. I had no evidence as to whether these costs have previously been incurred or why they are (or would be) separate from capital maintenance. I had no evidence as to how the proposed sum of $9,000 was calculated.
I make the same observations regarding the claims for “materials”, save for evidence that Mr Valiakalayi periodically replaces light bulbs.
It is difficult to envisage maintenance services provided by a painter that are not painting (i.e. maintenance) of a capital item, and so to be dealt with under the separate item for capital maintenance.
The claim for “rubbish management” appears to duplicate the rubbish management services provided by Cut Price Trash Paks and Suez, especially where there is no suggestion of any other costs incurred for rubbish management.
I considered the possibility that Pines Management holds invoices for repairs and maintenance separate from invoices for capital maintenance but has not produced them to the Tribunal, especially where – according to the budget – $18,061 was spent on this line item per Pines Management’s audited income and expenses for the previous financial year.
Several difficulties arose with that possibility.
First, Pines Management was on notice from the residents’ documents filed in the Tribunal that they objected to this line item because of “insufficient details and invoices”. It would seem that if Pines Management had invoices to substantiate expenditure on items of this kind in the previous year, separate from capital maintenance, to provide a basis for this challenged line item in the proposed budget, they would have produced them. It did not do so. I drew the inference that they do not exist.
Second, Pines Management’s financial report for the year ended 30 June 2017 gives no indication as to how the “audited” expense of $18,061 was derived. The financial report simply provides a global sum of $32,159 for “maintenance, gardening and repairs”, which appears to be comprised of gardening expenses ($7,202), repairs and maintenance ($18,061) and capital maintenance ($6,896). However, the basis for those three sums is unknown, save for the gardening expenses which appear predominantly to relate to maintenance of the vacant land.
If Pines Management wants the residents to contribute funds for “repairs and maintenance” separate from garden and capital maintenance, it is incumbent on Pines Management to produce evidence to them to substantiate this past expenditure as a platform or basis from which to contend that the expenditure is likely to be ongoing and needs to be allowed for in the proposed budget. Pines Management has not produced any evidence either to the residents before this proceeding began, or to the Tribunal in this proceeding, to prove this past expenditure of $18,061 or any of it.
Pines Management still has that opportunity. If that evidence is produced, distinguishable from garden maintenance or capital maintenance and attributable to repairs and maintenance of the retirement village, Pines Management can amend the approved annual budget under section 167(1) of the RV Act if the residents approve the amendment.
However, on the evidence presently before me, I can surmise only minor items such as replacement lightbulbs for repairs and maintenance that would not constitute capital maintenance. For this item I allow $300.

Capital maintenance

‘Capital maintenance’ is defined in section 135(1) of the RV Act as follows:
capital maintenance—
(a)   means works carried out for repairing or maintaining a capital item; and
(b)   includes works prescribed by regulation as being capital maintenance; but
(c)   does not include works prescribed by regulation as not being capital maintenance.
‘Capital replacement’ is defined in section 135(1) of the Act as follows:
capital replacement—
(a) means works carried out for replacing a capital item; but
(b) does not include capital maintenance.
Regarding funding for capital maintenance and capital replacement, section 141 of the RV Act states:
141    Funding of certain capital maintenance and capital replacement
(1)     The operator of a retirement village may fund the cost of capital maintenance for which the operator is responsible from the following sources:
(a)    the capital works fund for the village (if any);
(b)    recurrent charges.
(2)     The operator must bear the cost of capital replacement of a capital item for which the operator is responsible.
(3)     This section does not authorise the funding of any of the following from the capital works fund or recurrent charges for the retirement village:
(a)    the construction of a new building or a new stage of the village;
(b)    any work arising from the breach of a statutory warranty under the Building Act 2004, section 88 (Statutory warranties), in relation to which a proceeding may be started under that Act;
(c)    the depreciation of capital items;
(d)    the refurbishment of vacant residential premises in the village;
(e)    anything else prescribed by regulation.
‘Capital item’ is defined in section 135(1) of the RV Act as follows:
capital item, for which the operator of a retirement village is responsible—
(a)       means—
(i)     a building or structure in the village; and
(ii)     plant, machinery or equipment used in the village’s operation; and
(iii)    any part of the village’s infrastructure; and
(iv)    any other item prescribed by regulation; but
(b)       does not include a capital item that is—
(i) owned by a resident of the village; or
(ii) common property under a community title scheme or units plan; or
(iii)           prescribed by regulation.
For the purposes of the definition of capital item in section 135(1)(a)(iv), items prescribed as capital items are stated in section 24 of the RV Regulation as follows:
24 Capital item—Act, s 135 (1), def capital item, par (a) (iv)
The following capital items in a retirement village, including those in residential premises in the village, are prescribed:
(a)    fixtures;
(b)    fittings;
(c)    furnishings;
(d)    non-fixed items.
Examples—par (a)
bench tops, built-in cupboards and wardrobes, floor coverings, hot water system, stove
Examples—par (b)
light fittings, taps, sanitary fittings
Examples—par (c)
curtains, blinds
Examples—par (d)
whitegoods, portable air conditioner, fan, tables, chairs
In Alloura Waters Retirement Village Residents Committee v Living Choice Australia Pty Ltd,[9] the NCAT commented on capital maintenance as follows:
21. It is the responsibility of an operator to allocate a sufficient amount for "capital maintenance" as defined (RVA s 4) when preparing a proposed annual budget for the village. This includes maintenance and repairs to capital items in the village and for those items inside a resident's unit for which an operator is responsible. Examples of maintenance include: carpet cleaning, air conditioner servicing, painting the village, repairing footpath cracks, replacing tap washers and replacing faulty stove elements.
22. The RVA (s 4) defines capital maintenance as: "works carried out for the purpose of repairing or maintaining an item of capital and includes works prescribed by the regulations as being capital maintenance, but does not include works that are prescribed by the regulations as not being capital maintenance". In this regard, the relevant regulation is RVR reg 5 which prescribes, as not being capital maintenance, work done to substantially improve a capital item beyond its original condition or work done to maintain or repair an item of capital that it would be more cost effective to replace. Furthermore, "capital replacement" as defined (RVA s 4), being works carried out for the purpose of replacing an item of capital, expressly excludes capital maintenance.
[9] Alloura Waters Retirement Village Residents Committee v Living Choice Australia Pty Ltd [2014] NSWCATCD 68 at [21] – [22]
Pines Management provided invoices for replacing an alarm number pad and door station ($1,717.57), repairing the main hot water boiler ($872) servicing the sumps and water tanks ($1,182.50), servicing the garage doors ($750), repairing a damaged safety door ($400), replacing perspex on a gate and installing a cover over heating vent in unit 3 ($465), replacing toughened glass ($590), attending to the lockout of a resident ($115), annual service and maintenance of air-conditioning units in apartments within the retirement village ($900) and periodic repairs to individual air-conditioning units within particular apartments (totalling $609).
Pines Management did not put forward these invoices for the purpose of obtaining a finding that they should be paid from recurrent charges. They are put forward, for present purposes, only as evidence to derive an appropriate amount to include in the budget for capital maintenance. In my view, they provide a useful guide as to an appropriate amount.
Regarding the cost of replacing the alarm pad and doors station, the residents submitted that the cost should not be included as part of capital maintenance because it is a capital replacement cost. In reviewing a budget for future costs, I did not need to decide the point but without further details, the cost appears to be replacement of a faulty part in the course of the maintenance of an overall capital item, meaning the alarm system, and so could properly be characterised as capital maintenance.
Without further detail, and without making a finding, all of the other items, in my view, can also be broadly characterised as involving capital maintenance and assist for the purpose of setting an appropriate amount for capital maintenance in the budget.
The respondents’ queries about these items go more to the question of why they needed to be paid from recurrent charges. Many cases have dealt with disputes as to whether expenditure is capital maintenance (which an operator can recoup from recurrent charges) or a capital expense (which an operator must meet from its own money).[10] The potential for later disputes about expenditure is no reason not to allocate an appropriate amount in a budget for capital maintenance.
[10] AB Hunt v Kurrajong Village Pty Ltd [2006] NSWCTTT 125; Sakkara Investment Holdings Pty Ltd atf Sakkara Landings Trust v Residents Committee of the Landings [2017] NSWCATCD 29
As noted in Alloura Waters quoted above, Pines Management has a responsibility to allocate a sufficient amount for capital maintenance. That allocation, however, does not preclude the residents from later challenging the characterisation of an expenditure, even where the accounts have been audited. In The Residents Committee of the Landings v Sakkara Investment Holdings Pty Ltd T/As Sakkara Landings Trust[11] the NCAT rejected the proposition that the audited accounts of the operator are conclusive as to whether monies have been properly expended against an item in the proposed budget.
[11] The Residents Committee of the Landings v Sakkara Investment Holdings Pty Ltd T/As Sakkara Landings Trust [2015] NSWCATCD 113 at [74]
That is so, notwithstanding Pines Management’s obligation to ensure that the accounts “correspond as closely as possible with the layout of the proposed annual budget.”[12] In Sakkara Investment Holdings Pty Ltd atf Sakkara Landings Trust v Residents Committee of the Landings Retirement Village [2016] NSWCATAP 52, the NCAT Appeal Panel commented on that obligation as follows:
Given the statutory requirement for itemisation that governs the proposed annual budget and its layout, the RV Act envisages that the audited annual accounts will have, to the maximum extent possible, the same layout, and thus the same line items, as the proposed budget. In this way, residents will be able meaningfully to compare the annual budget that they (or the Tribunal) approved with the audited annual accounts in order to determine whether the operator has in fact expended the money received by way of recurrent charges in accordance with the approved annual budget, as required by section 116(3) and whether any variations are “minor”.
[12] Retirement Villages Act 2012, section 169(6)
In this case, of concern is that all the items, including attending to the resident’s lockout, total only $6,091, yet Pines Management seeks approval of $12,000 for capital maintenance. This is approximately double the amount ($6,896) said to have been expended on capital maintenance in the previous year.
There is no explanation for why a budgeted allocation twice that of the previous year should be approved.
In my view, as noted in Queens Lake Village and in Carey Bay Retirement Village, an operator (and in this case Pines Management) that seeks significant financial contributions from residents of a retirement village in order to fund anticipated capital maintenance of the village must demonstrate what those estimated costs will be in a transparent manner by reference to evidence so that the residents know, and can challenge if they so choose, the proposed expenditure of their money.
On the evidence before me, for this item I allow $6,100.

Window cleaning

Pines Management seeks approval for $2,000 to clean the windows, contending it has insufficient funds to pay more. It relies on an email that Mr Valiakalayi sent to all residents on 12 May 2017 that stated:
As you may (sic) aware from our quarterly accounts, the current financial year is already running at a loss with expenses incurring (sic) is is more than our income from recurrent charges” and “there is no (sic) sufficient amount to pay for window cleaning contractors.”
There are several difficulties with Mr Valiakalayi’s position.
First, I am not satisfied that the retirement village is running at a loss. The only evidence in support of that proposition is Pines Management’s statement of profit or loss for the year ended 30 June 2017 that records a net loss of $5,728. However many of the claimed expenses, for example the rates payable for the adjoining vacant land, are not attributable to the retirement village.
I also have real doubts about the expenditure of $32,159 at the retirement village for the year ended 30 June 2017 for “maintenance, gardening and repairs”. The residents challenged a proposal for amounts totalling $46,800 for the five items under the heading “maintenance, gardening and repairs” in the proposed budget on the basis (among others) that Pines Management had not produced sufficient invoices or detail about this proposed expenditure. In answer, Pines Management has produced invoices which, in total, evidence expenditure of approximately $12,200, much of which of which in my view does not relate to the retirement village.
Second, the central purpose of setting an annual budget is to ensure, as best as possible, that the operator can cover the costs of operating the retirement village during the applicable financial year and into the future. If costs are to be trimmed in order to operate the village within the means of the residents, discussion needs to occur with the residents as to where costs can be trimmed.
In the case of window cleaning, it is clear from the evidence that the residents place a high priority on having clean windows and are willing to pay for it. They tendered in evidence a quote from Stuart’s Window Cleaning dated 18 September 2017 for window cleaning for the apartment building (outside only) on all three levels and the outside windows of all the villas for a total price of $3,600. The residents asked for that quote be used for the purpose of approving proposed expenditure on window cleaning of $3,600.
Third, the proposition that Pines Management cannot afford window cleaning because of other costs is disingenuous. As mentioned in relation to cleaning, and as later mention in relation to other costs, section 116 of the RV Act provides (subject to a small exception) that money allocated to an item in the budget cannot be spent on another item. If the residents wish to spend $3,600 on window cleaning, so be it. Expenditure on that item cannot have any bearing on expenditure on any other items.
For this item, I allow $3,600.

Village manager

By letter dated 1 February 2016, Pines Management employed Mr Valiakalayi as the manager of the retirement village with an annual salary package of $60,000 comprised of an annual salary ($50,400), motor vehicle and mobile phone allowance ($4,800) and a superannuation guarantee charge ($4,800). Under his employment agreement, Mr Valiakalayi is required to work Monday to Friday, 9.00am to 3.00pm, and be available to the residents 24 hours a day 7 days a week (except when on leave) on his mobile phone and in person to attend to any emergencies or residents’ other requirements.

Pines Management propose that Mr Valiakalayi’s salary be increased for the year ended 30 June 2018 to $61,000 per annum, comprised of an annual salary ($51,000), motor vehicle and mobile phone allowance ($4,800) and a superannuation guarantee charge ($5,200). It also proposes a further $3,000 to cover the cost of a replacement manager when Mr Valiakalayi is on leave.
The residents object for several reasons.
First, Mr Valiakalayi is not fully occupied and they never agreed that the employment of a full-time manager is warranted. They are not willing to pay recurrent fees to pay Mr Valiakalayi’s salary, rather than to pay for other services and facilities which they believe have greater priority. They also contend that Mr Valiakalayi does not work his full hours, and does a lot of work for the exclusive benefit of Mr NK Aggarwal. In particular, they contended that Mr Valiakalayi spends time showing vacant units to prospective residents. Under section 159 of the RV Act, his salary payable for his time in doing so “must not be financed by way of recurrent charges”.
The residents contend that for their small retirement village, necessary duties of a manager could be properly done in no more than four hours per day, Monday to Friday. They submit that the position should be a part-time position.
The residents said that they did not approve the expenditure of $60,000 in the budget for FY17 to employ Mr Valiakalayi. Assuming this is right, I presume that Pines Management have not been paying Mr Valiakalayi’s salary from money received from the residents by way of recurrent charges. To have done so would seem to be an offence under section 166 of the RV Act.
In issue is the proposal for Mr Valiakalayi’s salary, increased to $64,000 (including the cost of replacement manager when Mr Valiakalayi is on leave), to be approved in the annual budget for FY 18 so that it can be paid from money received from the residents by way of recurrent charges.
The starting point is to consider Mr Valiakalayi’s duties. In his statement, supplemented by his oral evidence during the hearing, Mr Valiakalayi stated that he attends to issues as they arise including transporting residents to medical appointments, arranging activities for the residents in the retirement village, managing the day-to-day finances in terms of banking, paying invoices and purchasing necessary items for the village, and liaising with tradesmen to attend the village to carry out maintenance and repairs. He stated that when he commenced as manager he worked three hours per day but this was found not to be sufficient to fulfil his various duties and so his engagement was increased to six hours per day plus on-call availability.
During the hearing, Mr Valiakalayi was more specific about his duties. He said:
(a)He has done a MYOB course, and spends 10 – 15 hours per week doing office administration.
(b)He spends approximately three hours per week speaking with residents and responding to their emails.
(c)He spends approximately two hours per week inspecting the village grounds, particular looking out for safety issues and addressing them. He said that he walks around the village every day.
(d)He drives 1-2 residents to see a doctor in Mawson, and has done that approximately 15 times in the last six months. He said that the trip from the retirement village to the doctor is less than 1 km each way.
(e)Every Monday he drives the resident of unit 19 to the shops, which I understood to mean the Mawson shops.
(f)He does not show prospective residents around the village, saying “I’m 100% not doing it”.
(g)He meets with the auditor, Mr Beard, and gives him the accounts from the MYOB system to enable Mr Beard to audit the financial reports.
(h)He maintains the retirement village clubhouse, which has a business centre, a library and a large TV, and the exercise room which has a treadmill and an exercise machine.
(i)He agrees that maintenance of the retirement village gardens is largely the effort of the residents.
(j)He does not have any trade skills, and does only simple tasks such as changing light bulbs. He engages tradespeople to do necessary repairs and maintenance.
(k)He opens the gate once a month to technicians to enable them to take meter readings, which I understood to mean readings of water, electricity and gas consumption.
(l)He has tried to organise village activities such as outings, yoga, Tai Chi and carpet bowls to make the retirement village more attractive to potential residents, but most of the existing residents (for different reasons) did not wish to be involved in the activities he organised.
In terms of training and experience, Mr Valiakalayi said that he worked in a retirement home in New Zealand between 2010 and 2013, and has a bachelor’s degree in commerce that he was awarded in India.
I have considered each proposed component of Mr Valiakalayi’s salary package.

Annual Salary

Mr Valiakalayi’s employment contract proposes an annual salary of $51,000 for which he will be required to work 30 hours per week plus be available to the residents on a 24 hours a day seven days a week basis for emergencies. In approximate terms, this equates to an hourly rate of $32.
I am satisfied on the evidence that Mr Valiakalayi does not have any skills relevant to the position of manager of a retirement village, save (perhaps) for administration skills necessary to carry out the necessary bookkeeping regarding operations of the retirement village. It was difficult to ascertain whether $32 was an appropriate (or lawful) hourly rate. The best guide would be the Federal award that covers Mr Valiakalayi’s employment, but Mr Valiakalayi gave evidence that he did not even know what a Federal award is much less whether there is an award that covers his employment or (if so) what it is.
At hearing, Mr Christensen also did not know whether there is an applicable award. After the hearing, he stated in an email to the residents sent on 5 October 2017 “my research indicates that [a] retirement village manager should be employed under the Aged Care Award”, which I take to mean the Aged Care Award 2010 (Cth), but – assuming he is correct – Mr Christensen gave no indication of Mr Valiakalayi’s entitlements under that award.
It is completely unsatisfactory that the Tribunal is left to obtain for itself a copy of the Aged Care Award, then try to ascertain whether it applies and (if it does) then determine Mr Valiakalayi’s award entitlements, devoid of any submission from Pines Management on these issues. In my view, it is also not appropriate for the Tribunal to undertake such a task in the absence of any position from either party on the issue.
Mr Christensen’s response to my inquiry, Mr Valiakalayi’s evidence that he was unaware of what a Federal award is and that his employment contract makes no mention of an applicable award leads me to believe that his contract was prepared without regard to the Aged Care Award 2010. It might not be applicable. I have no evidence of comparable salaries paid to persons doing similar work in other retirement villages, and am left with no point of reference for determining the appropriateness of Mr Valiakalayi’s hourly rate.
The residents also submitted that Mr Valiakalayi does not make any significant contribution to the clubhouse or leisure centre. They note that they were largely responsible for fitting out these rooms. In any event, I cannot see how the maintenance of these rooms is time consuming for Mr Valiakalayi.
On the evidence, Mr Valiakalayi’s primary responsibility seems to be office administration, and that seems to occupy most of his time. However his skill at performing that function seems to be doubtful. Mr Beard gave evidence that he spent considerable time correcting mistakes in the MYOB files and that in his view “the bookkeeper”, meaning Mr Valiakalayi, “doesn’t know what he’s doing”.
Mr Beard gave evidence that this was not entirely Mr Valiakalayi’s fault because he is using a MYOB software system that is out of date. Mr Beard explained that the software system being used is a training package, and that he has been unable to persuade Mr NK Aggarwal to spend $30 per month to obtain up-to-date software that was fit for purpose. Mr Beard said that he had spoken repeatedly to Mr Aggarwal about this need for up-to-date software, but Mr Aggarwal is unwilling to spend the money.
Apart from office administration, Mr Valiakalayi properly admitted that he does not have any skills relevant to the management of a retirement village. He does not have any tools, save for a ladder to assist when changing light bulbs, and he engages trades persons for repairs and maintenance.
A threshold question arose at hearing as to whether the budget should allow for an annual salary appropriate for employing a person appropriately skilled to manage a retirement village, which could easily exceed $64,000, or a salary appropriate for the skills and services that the residents have been receiving during the past financial year and which Pines Management propose they would continue to receive in the form of Mr Valiakalayi’s ongoing employment.
Mr Christensen submitted that the budget should be set by reference to the facts and circumstances as they are, not what they might be. I agree. There is no suggestion that Pines Management are seeking to employ an appropriately skilled retirement village manager, and the budget is proposed in prospect of Mr Valiakalayi’s ongoing employment.
In my view, neither Mr Valiakalayi’s employment nor his salary is in proportion to his duties. Regarding his primary responsibility of managing the books, it is clear on the evidence that Pines Management would do better to contract with a bookkeeper who has the relevant skills and equipment to perform this role. Otherwise, Mr Valiakalayi provides only unskilled labour. I accept the residents’ submission that his other duties can be comfortably done in approximately 4 hours per day, given the comparatively small size of the retirement village and that six of the units are vacant.
Mr Valiakalayi said that if his full-time employment salary and entitlements are not increased or, or at least maintained, he would resign. So be it. His wishes are no reason for the residents to fund a full-time position that is not necessary.
As mentioned, I have no evidence as to an appropriate hourly rate, but allowing an hourly rate of $30, four hours per day, five days per week, I calculate a part-time weekly salary of $600.
In relation to salary, and allowing 4 weeks paid annual leave, for this item I allow $31,200.

Motor vehicle and mobile phone allowance

Mr Valiakalayi said he uses his car to attend meetings with the auditor and the accountants, take residents shopping, pickup materials for maintenance and repairs, conduct “market research” of suitable materials for repairs and for visiting other retirement villages. He said his car allowance ($4,800) is calculated on the basis of travelling 26 km per day, 240 days per year, that being 6,240 km per annum, at .76 cents per kilometre.
The residents contended, in substance, that Mr Valiakalayi’s claimed duties and expenses are overstated in order to justify payment of the allowance.
The evidence does not support Mr Valiakalayi’s need for a car to perform his duties. Mr Valiakalayi said he does not maintain a log book, but accepting he drives residents to the Mawson shops each week, he states that the travel distance is less than 1 km each way. Assuming, say 50 trips a year, the total distance is still only 100 km. Mr Valiakalayi said he took a resident to the airport, but only once in the past three years. It appears clear that taxis for such minimal travel is a more cost efficient means of meeting this need, and arguably should be paid by the residents wishing to travel.
Visits to the auditor or the accountant would be necessary, I expect, but only once or twice a year especially where records can be conveyed electronically or by post and conversations about them can occur by telephone.
Why Mr Valiakalayi would need to visit other retirement villages, or at least more than occasionally, was not explained.
His need to pick up materials or conduct “market research” for materials for maintenance and repairs also seems doubtful when he does not do any maintenance and repairs and engages tradespeople for that purpose.
In summary, I am not persuaded that a motor vehicle allowance is warranted, and so conclude that it should not be added to Mr Valiakalayi’s salary.

Superannuation Guarantee Charge

I did not receive any evidence or submission as to the calculation or the applicable law concerning the superannuation guarantee charge or why it is even payable. If it is payable, evidence could readily have been produced regarding the amount previously paid under Mr Valiakalayi’s existing contract and the fund into which it has been paid. No such evidence has been provided.
I return to the abiding concern that in the absence of evidence, either to the residents or to the Tribunal, expenditure in a proposed budget should not be allowed. I reject the claim.

Relief manager

Again, I did not receive any evidence concerning employment of a relief manager when Mr Valiakalayi takes leave. I do not know whether this is a past practice, or only a proposal for the future. Evidence could readily have been produced regarding the proposed item of expenditure, but no such evidence has been provided. If a later actual proposal for actual employment of a relief manager is made, and the respondents agree to it, the budget can be amended under section 167 of the RV Act. However, as matters presently stand, I reject the claim.

Rates

The rates assessment notice for year ended 30 June 2017 notes the annual rates for the land is $19,673.88. It was issued on 15 July 2016. For reasons unexplained, Pines Management did not provide a rates assessment notice for FY18, presumably issued in July 2017. For budget purposes, I will therefore proceed on the available evidence that the rates for FY18 are materially the same.
As mentioned above, approximately 30% of the land is occupied by a nursing home, 30% by the retirement village and 40% is vacant.
Pines Management submitted that 70% of the rates should be paid by the residents of the retirement village and so proposed that $14,000 be allowed in the proposed budget for rates. Mr Christensen submitted that because the residents have the use and benefit of the vacant areas of the land for their leisure and enjoyment, the rates attributable to that vacant land should be included in the proposed budget. Mr Christensen explained (and I accept) that the proposed sum of $6,000 in the proposed budget was an error calculated by allocating 30% rather than 70% of the rates to the retirement village.
The residents submitted that they should pay 30% of the rates on the basis that the retirement village occupies 30% of the land, and $6,000 should therefore be allowed for rates in the proposed budget. They reject the proposition that the vacant land is in any way maintained, treated or used as part of the retirement village and so reject the submission that this portion of the land should be treated as part of the retirement village for rate allocation purposes in the same way that they reject the claim for gardening and maintenance of the vacant land.
The basis of the residents’ liability to pay rates at all is unclear. The Service Agreement provides for an ‘Annual Expenditure Budget’ defined to mean the budget for the operation of the ‘Resort’ for a financial year and an ‘Annual Recurrent Charges Budget’, defined to mean the budget for the recurrent charges to be paid by the residents during a financial year addressing the outgoings of the ‘Resort’. The Service Agreement defines “Outgoings of the Resort” to mean all of the expenses listed in Annexure 1 paid by the Manager in respect of the resort – meaning the retirement village – which includes all rates, taxes, charges, levies, assessments and other outgoings in respect of the resort.
Why outgoings of the resort includes general rates is unclear. General rates are not payable by Pines Management: they are payable by the Crown lessee, Pines Living. Also, it is not clear why they are payable as an outgoing of the Resort (or retirement village): they are payable by reference to the unimproved (i.e. vacant) value of the land. General rates would be payable if the retirement village did not even exist.
However, in relation to the current dispute, the residents take issue only with their liability in respect of the vacant portion of the land. In that respect, I agree that they should not be liable to pay the rates in relation to that part of the land for the same reason that I have determined that they are not liable to pay for the maintenance and gardening of the vacant land. It is land that does not concern the retirement village.
For this item, I allow $6,000.

Telephone & internet

Regarding the claim for telephone, Mr Valiakalayi stated that Pines Management maintains a “fire phone” which is connected to a fire alarm and a “lift phone” which operates as an emergency phone in the lifts. He provided invoices to evidence that these phone lines cost $30 and $58.19 per month, respectively.
Regarding the claim for internet services, Mr Valiakalayi stated that Pines Management obtains access to the internet through a “NBN box” in unit 9 occupied by Mr NK Aggarwal. This provides unlimited internet usage for Pines Management and Mr Aggarwal. The line also provides a telephone service for Pines Management and Mr Aggarwal. Mr Valiakalayi provided an invoice to evidence that the service costs $59.90 per month.
Mr Valiakalayi explained that it was not possible for Pines Management to obtain an independent internet service, and so it “piggybacks” on the service provided to Mr Aggarwal’s unit.
Mr Valiakalayi said that the budget proposes that the monthly cost be a apportioned as $20 for Pines Management’s “Business Centre”, which I understand to mean Mr Valiakalayi having access to the internet; $19.90 for Pines Management’s use of a business telephone; and $20 for Mr Aggarwal’s personal use of the internet and telephone.
The residents raised many queries about the charges. Questions arose about whether the invoices fluctuate from month to month, whether a better monthly rental can be achieved and whether there is unnecessary duplication between the different services. It is not enough to raise queries. The Tribunal must determine an appropriate amount to allow in a budget by reference to evidence.
On balance, I am prepared to accept that the monthly costs for the fire and lift phones, and the apportionment to Pines Management for the cost of the internet and telephone service to unit 9 are reasonable. Taking the monthly costs, the annual costs for the fire phone, lift phone and phone are $360, $698.28 and $478.80, respectively, to a total of $1537.08.
For this item, I allow $1,600.

Electricity

Pines Management makes a claim of $7,500 for electricity. The residents, understandably, objected on the grounds that invoices had not been provided to evidence the amount sought.
After the hearing, Pines Management provided tax invoices variously dated between 28 June 2016 and 13 June 2017 from ActewAGL directed to Pines Living in support of the claim. Why they are directed to Pines Living, not Pines Management is unclear. However, I will assume that they relate to electricity supplied to the retirement village. Each invoice identifies the supply and consumption charges over a monthly period.
Mr Valiakalayi stated that from September 2016 there have been two electricity meters: one for the retirement village and one for the nursing home, and that the electricity costs used in the construction of the nursing home were reimbursed to the retirement village. The installation of separate meters seems to be reflected in the tax invoices, each of which shows a marked decline in electricity usage from August 2016.

The tax invoices issued after December 2016 evidence a monthly supply charge of approximately $36 and a monthly consumption charge varying between $600 in the summer and $700 in the winter. I will take an average of $650 per month for consumption to a total of $686 per month.
The residents do not challenge their liability to pay electricity consumption charges. Their concern was the lack of transparency about the proposed budget figure of $7,500.
On the evidence, a monthly sum of $686 computes to $8,232 per annum.
For this item, I allow $8,300.

Water

Mr Valiakalayi stated that there is a single water meter on the land, which measures water consumption for both the retirement village and the nursing home. Icon Water invoices Pines Living for a quarterly sewerage supply charge, water supply charge and water consumption charge without distinction between the retirement village and the nursing home.
Mr Valiakalayi stated that there is a sub-meter to measure water used only by the nursing home. He stated that he inspects the sub-metre and, after reading the meter, he deducts the amount of water used by the nursing home from the total water bill to derive the water used by the retirement village. He provided, by way of evidence, a tax invoice dated to December 2016 from Icon Water on which he had handwritten his calculations of the retirement village water consumption.
The residents complain that this is a poor system for calculating their liability for water and sewerage. There is no transparency regarding the calculations, nor evidence to suggest that the nursing home has reimbursed the retirement village for its share of the supply and consumption charges. These concerns are understandable, and spending not in accordance with the budget could later be challenged under section 166 of the RV Act, but they are separate to the immediate question of determining a proposed budget for sewerage and water supply and for water consumption.
The evidence is deficient in that I am provided with only one tax invoice for the period 1 October to 31 December 2016. The invoice indicates that water usage fluctuated markedly. Consumption in the September quarter was approximately half the consumption in the November quarter. Questions also arise as to whether the charge of $2.61 per kL remains current and whether there is a finite amount of water that is provided at a lower charge rate.
Pines Management proposed that the sewerage and water supply charges be shared equally between the nursing home and the retirement village. I agree: supply is a fixed cost.
Regarding water consumption, Mr Valiakalayi’s handwritten calculation suggests that the nursing home takes approximately 50% of the water consumed.
Doing the best I can, I allow an average total quarterly consumption of 600 kL, and allow 300 kL attributable to the retirement village at a cost of $2.61 per kL to arrive at a total budgeted water consumption cost attributable to the retirement village for FY 18 of $3,132.
The total supply charges to the land, based on the evidence I have, is $630.92. I attribute 50% of that cost to the retirement village: $315.46.
After adding the two amounts, to a total of $3,447.46, for this item I allow $3,500.

Contingencies

Pines Management proposed an allowance of $2,500 for “contingencies”, meaning unexpected costs that it might incur during the financial year. Mr Christensen submitted that flexibility for unexpected expenses should be provided.
As the residents pointed out, section 164 of the RV Act provides:
A regulation may limit the amount a proposed annual budget may allocate for contingencies.
As they also pointed out, section 38 of the RV Regulation provides a limit on contingencies in an annual budget. It provides::
38 Limit on contingencies in annual budget – Act, s 64
The maximum amount that may be allocated is -
(a) For an annual budget of $200,000 or less $1000; and
(b) For an annual budget that exceeds $200,000 0.5% of the total amount of the annual budget.
It is of concern that Pines Management, in the business of administering a retirement village, would be unaware of such an explicit statutory provision.
In Beattie v Wesley Mission[13] the NCAT Appeal Panel agreed with the statement made in the decision under appeal:
“Contingency” is otherwise not defined in the RV Act or the RV Regulations. I understand the word to be used in the sense of an unknown or unforeseeable incident, occurrence or expense, rather than in the sense of an attempt to estimate brackets or even guess) what may possibly or probably happen as in this particular case”.
[13] Beattie v Wesley Mission [2017] NSWCATAP 12 at [40]
In Beattie v Wesley Mission[14] the NCAT Appeal Panel commented on the reasoning behind the budgetary process and, implicitly, why such a small amount can be allocated to contingencies (noting that a maximum of $100 applied in NSW at the time):
42. When the overall scheme of the budgetary process in Part 7 of the Act is considered, it is apparent that the purpose of section 115A is to ensure that any budget proposed by the operator and eventually approved by residents breaks estimated expenditure down into identifiable (and meaningful) categories of expenditure, for which a reasonably informed estimate can be made. In the words of the Tribunal’s reasons, it requires “...an attempt to estimate (or even guess) what may possibly or probably happen as in this particular case”. It does so by prohibiting, in section 115A, the allocation of any significant amount of expenditure to an innominate and unspecified class of potential expenditure: what the Tribunal’s reasons call “...an unknown or unforeseeable incident, occurrence or expense”. Colloquially, the Act requires that a budget divide proposed expenditure into labelled “buckets” of proposed outgoings; what it prohibits is the substitution for these “buckets” to any significant degree of a general “bucket” labelled “Contingencies” (which might loosely be described as a “slush fund”).
[14] Beattie v Wesley Mission [2017] NSWCATAP 12 at [42]
The NSW Regulation no longer provides for a “slush fund”. The maximum amount that may be allocated for contingencies in a proposed annual budget is now set at $1.[15]
[15] Retirement Villages Regulation 2017, regulation 21
However, for present purposes, the residents agree to the maximum amount allowable for contingencies of $1,000, although it is difficult to understand why $1,000 for “contingencies” does not duplicate $1,000 for “petty cash expenses by manager”. Nevertheless, where the residents agree to this budgeted item for this amount, I allow it.
For this item, I allow $1,000.

Capital works fund

Pines Management propose that $4,000 be approved in the annual budget to be set aside in a capital works fund for funding future capital maintenance. I had no evidence as to how the proposed amount was derived. The residents point out that there has not been a capital works fund in previous financial years.
Section 143 of the Act provides for a capital works fund as follows:
143   Capital works fund
(1)     This section applies if an approved annual budget for a retirement village provides for the setting aside of any part of the recurrent charges for funding capital maintenance in a period that extends beyond the end of the financial year to which the budget relates.
(2)     The operator of the village must establish and maintain a capital works fund.
(3)     However, this section does not require that a separate fund be established for each financial year.
(4)     A capital works fund must be held in an account with an authorised deposit-taking institution or as otherwise prescribed by regulation.
(5)     The operator must pay the following into the capital works fund:
(a)    an amount of the recurrent charges as may be needed under an approved annual budget;
(b)    any interest received from the investment of the whole, or part of, the capital works fund.
The residents have concerns about the detail of the proposed quantum and its purpose. In my view, several factors allay those concerns.
First, once approved in the annual budget, Pines Management must establish and maintain a separate fund (the capital works fund) into which that money is placed.
Second, sections 137, 141 and 143 together make clear that money held in the capital works fund may only be used to fund capital maintenance. Sections 141(2) and 141(3) make clear that funds in the capital works fund cannot be used to cover the costs of capital replacement of a capital item or any of the items listed in section 141(3). In Alloura Waters Retirement Village Residents Committee v Living Choice Australia Pty Ltd,[16] the NCAT said:
23. Residents of a retirement village pay amounts referred to as "recurrent charges" (defined in s 4 RVA) under a village contract on a recurrent basis. Most villages, including Alloura Waters, have a "capital works fund" (defined in s 99 RVA). It is a fund where any part of the recurrent charges is set aside for longer term capital maintenance (i.e. funding capital maintenance for the village in a period that extends beyond the end of the financial year to which the budget relates). Therefore, the costs of capital maintenance can be paid from the recurrent charges or from the village's capital works fund (s 97 RVA).
24. However, recurrent charges and the capital works fund cannot be used to substantially improve a capital item beyond its original condition or to maintain or repair an item of capital that it would be more cost effective to replace (RVR reg 5). These are not capital maintenance items for the purposes of the RVA and the RVR or, to put it another way, these are capital replacement items.
[16] Alloura Waters Retirement Village Residents Committee v Living Choice Australia Pty Ltd [2014] NSWCATCD 68 at [23] – [24]
I recognise that much debate can (later) occur as to whether a cost should be characterised as capital maintenance or capital replacement, but that is not a reason to limit the creation or the quantum of a capital works fund to be used for its proper purpose.
Third, under section 168(3) of the RV Act, Pines Management commits an offence if it does not give a copy of the retirement village’s quarterly accounts to the residents committee not later than the prescribed time after the end of each quarter. I presume this has been occurring. Under section 169 of the RV Act, Pines Management commits an offence if it does not give a copy of the retirement village’s annual accounts to the residents committee, which (under section 169(3)(ii)) must include details of the balance of the capital works fund. These provisions should give sufficient transparency regarding the amount held in, and expenditure from, the capital works fund.
It is difficult to question the appropriateness of the proposed quantum ($4,000), but where it must be quarantined for a precise legislative purpose, and where any interest received from its investment forms part of the capital works fund[17] it is in my view a reasonable sum with which to commence the fund.
[17] Section 143(5)(b)
For this item, I allow $4,000.

Approval of recurrent charges

I turn to Pines Management’s application for approval and increase in recurrent charges from $515.67 per month to $585 per month. As I understand it, the monthly amount is calculated by reference to 24 units to arrive at the proposed total annual income of $168,480.
Whilst I will make an order under section 163(2)(g) of the RV Act regarding spending, per an amended budget, it does not follow that recurrent charges should be set only by reference to the amended budget. Section 154(4) of the RV Act lists other factors that the Tribunal may consider.
Section 154(4)(g) of the RV Act provides that the Tribunal may consider “any other matter the ACAT considers relevant.” Issues that might be relevant, and about which I have not received submissions, include:
(a)Why Pines Management proposed a budgeted operating loss (on its revised figures) of more than $20,000, rather than a balanced budget.
(b)Whether recurrent charges should take into account that many (but not all) unit holders have differing contractual limits on the amount they must pay by way of recurrent charges.
(c)Whether Pines Living or Pines Management should pay (or is paying) the recurrent charges for the 6 unsold units, noting it is liable to pay the same amount as every other resident of a unit under section 147 of the RV Act.[18]
(d)The date from which residents should be liable to pay the amended recurrent charges.
(e)The amount of recurrent charges that have been paid during the applicable financial year, and by who.
(f)How Pines Management has covered its expenses since 1 July 2017.
(g)Whether an order should be made that the recurrent charges not be further amended for a stated period.
[18] Deahm v The Fairways Partnership (Retirement Villages) [2011] NSWCTTT 232
Cases such as Carey Bay Retirement Village Residents Committee v Anglican Care (Retirement Villages)[19] and Deahm v The Fairways Partnership (Retirement Villages)[20] illustrate the complexities and areas of dispute that can arise when determining recurrent charges for a retirement village.
[19] Carey Bay Retirement Village Residents Committee v Anglican Care (Retirement Villages) [2011] NSWCTTT 497 at [7] – [18]
[20] Deahm v The Fairways Partnership (Retirement Villages) [2011] NSWCTTT 232
For these reasons, I will re-list the matter for further hearing in mid-January 2018 on a date suitable to the parties on the question of the proposed amendment to recurrent charges.

Costs

At the resumed hearing I will also hear from the parties as to whether any order for costs, or payment for any other reason, should be made.[21]
[21] Section 181 of the RV Act provides that the Tribunal may make an order for the payment of an amount of money. This includes costs: Deahm v The Fairways Partnership (Retirement Villages) [2011] NSWCTTT 232
………………………………..
Presidential Member G McCarthy

Schedule 1
Doug Eastick	First Respondent
Ann-Marie Eastick	Second Respondent
Connie Praag	Third Respondent
Myra Cooper	Fourth Respondent
John Cooper	Fifth Respondent
Doreen Henson	Sixth Respondent
Roy Henson	Seventh Respondent
Wendy Hotchkiss	Eighth Respondent
Dianne Mitchell	Ninth Respondent
Greg Mitchell	Tenth Respondent
Krishnan Aggarwal	Eleventh Respondent
Kathy Carscadden	Twelfth Respondent
David Carscadden	Thirteenth Respondent
Marcia Else	Fourteenth Respondent
Noeline McGuffin	Fifteenth Respondent
Arthur McGuffin	Sixteenth Respondent
Irene Jadkonis	Seventeenth Respondent
Dan McKay	Eighteenth Respondent
Mary-Ann Wall	Nineteenth Respondent
George Wall	Twentieth Respondent
Dell Fitzpatrick	Twenty First Respondent
Harlinah Longcroft	Twenty Second Respondent
Pines Living Pty Ltd	Twenty Third Respondent
Margaret Rea	Twenty Fourth Respondent
Helen Thirkell	Twenty Fifth Respondent
Ronald Alpress	Twenty Sixth Respondent

HEARING DETAILS

FILE NUMBER:	RV1/2017
PARTIES, APPLICANT:	Pines Management (ACT) Pty Ltd
PARTIES, RESPONDENT:	Doug Eastick and Others
COUNSEL APPEARING, APPLICANT	Mr P Christensen
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	Peter B Christensen
SOLICITORS FOR RESPONDENT	N/A
TRIBUNAL MEMBERS:	Presidential Member G McCarthy
DATE OF HEARING:	27 September 2017

Expenses	2017-2018 Budget
Auditing	3,500
Accounting	0
Bank Fees	150
Legal Fees	0
Fire Appliances Servicing & Monitoring	3,811
Lift Maintenance	4,186
Insurance (Building & Workers Compensation)	12,062
Petty Cash Expenses by Manager	1,000
Cleaning	5,824
Gardening	1,300
Repairs & Maintenance	300
Capital Maintenance	6,100
Window cleaning	3,600
Pest Spray	1,200
Office Supplies	500
Village Manager	31,200
Rates	6,000
Telephone &Internet	1,600
Electricity	8,300
Water	3,500
Contingencies	1,000
Capital Works Fund	4,000
Total Expenses	99,133