Taylor v Milstern Retirement Services Pty Ltd
[2012] QCAT 433
•12 September, 2012
| CITATION: | Taylor v Milstern Retirement Services Pty Ltd and Anor [2012] QCAT 433 |
| PARTIES: | Judith Cecelia Taylor (Applicant) |
| v | |
| Milstern Retirement Services Pty Ltd (First Respondent) Milstern Retirement Living Pty Ltd (Second Respondent) |
| APPLICATION NUMBER: | VH006-09 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Ann Fitzpatrick, Member |
| DELIVERED ON: | 12 September, 2012 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1) Milstern Retirement Living Pty Ltd ACN 010661079 pay to Ms Judith Cecilia Taylor the sum of $102,329.50, within 21 days of the date of this Order. 2) Milstern Retirement Living Pty Ltd ACN 010661079 pay Ms Judith Cecilia Taylor’s costs of and incidental to the proceeding on the standard basis of assessment in accordance with the District Court Scale of Costs. 3) If the amount of Ms Taylor’s costs are not agreed between Ms Taylor and Milstern Retirement Living Pty Ltd within 14 days, the costs are to be assessed by Hickey & Garrett, Legal Costs Consultants, Level 21, 141 Queen Street, Brisbane at the cost of Milstern Retirement Living Pty Ltd. 4) Milstern Retirement Living Pty Ltd is to pay Ms Taylor’s costs (as agreed or assessed) within 14 days of such agreement or assessment. |
| CATCHWORDS: | Calculation of exit entitlement – costs Retirement Villages Act 1999 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
Background
On 13 July, 2011 a decision in this matter was made whereby it was ordered that the second respondent pay to the applicant an exit entitlement in the sum of $121,500 less fees and charges required to be deducted in accordance with the lease between the parties, the Public Information Document (PID), or the Retirement Villages Act 1999 (RVA).
The parties were ordered to deliver submissions and calculations in relation to the fees and charges which they assert should be offset against the sum of $121,500.00. The parties were also ordered to deliver submissions in relation to costs.
Second Respondent’s submissions
The second respondent filed submissions on 1 August, 2011, 11 August, 2011, 25 October, 2011 and 15 November, 2011.
The 15 November, 2011 submission summarises the second respondent’s calculation as follows:
Sale Price $121,500.00
Less:
Capital Gain 33% $12,167.00
Exit Fee $24,300.00
Outstanding Levies $ 4,342.00
Termination Costs $ 450.00
Reinstatement Costs $19,679.00 $ 60,938.50
Balance $ 60,561.50.
The second respondent has drawn its claim for these fees and charges from a combination of clause 8.1 of the lease and sections 1.4.3, 3.10 and 3.14 of the PID.
Applicant’s submissions
The applicant rejects the respondent’s calculations. She too submits that the exit fee should be calculated based on the PID and refers to clause 8.1 of the Lease as relevant.
The applicant submits that the calculation should be:
Sale Price $121,500.00
Les Exit Fee – 20% $24,300.00
Less Outstanding Levies Nil
Less Termination Costs –
legal fees $450.00
Less reinstatement costs
as per quote dated 4/6/06 $1,958.00 $ 26,708.00
$ 94,792.00
Analysis
In the Decision in this matter made 13 July, 2011, I noted that the applicant said that the effect of clause 8.2 of the lease is to determine the way in which the exit entitlement is calculated, save for any more beneficial provision in the PID and any inconsistent provision of the RVA which prevails. The respondents were noted to agree that the clause deals with calculation of the exit entitlement and that consistent with section 37(3) of the RVA, the applicant is entitled to use the most beneficial method in the lease or PID to calculate the exit entitlement.
The decision sets out a finding that the applicant’s entitlement to be paid the exit entitlement under the lease crystallised on 20 June, 2006. It was also found that the terms of the lease were more beneficial than the PID in that the lease anticipates payment of the fair market value of the right to reside by the owner to the resident, within a period after termination, not after resale by the owner, as anticipated by the PID. The decision also provides that clause 8.2.1 of the lease contemplates that the fair market value will be paid less certain fees and charges. I noted in the Decision that I had no information in relation to those amounts, nor whether the fees and charges contemplated by the lease are more beneficial to the applicant than the fees and charges referred to in the PID or the RVA. That is why the parties were asked to provide the relevant information and submissions.
[10]Both the applicant and second respondent appear to have directed themselves to clause 8.1 of the lease, not clause 8.2, despite the findings in the decision and their own earlier submissions.
[11]On the basis of my earlier findings set out in the 13 July, 2011 decision I have determined that the applicant is entitled pursuant to clause 8.2 of the lease to payment of a sum of money consequent upon her right to reside at Urimbirra Retirement Village having been terminated by the second respondent upon a ground set out in clause 6.3 of the lease.
[12]Clause 8.1 of the lease is not relevant to the applicant’s rights or entitlements.
[13]The PID provides for the pre-eminence of the lease. In Part 1 – Generic Information Chapter 4 – Resale Process Information, clause 1.4.1 provides:
“The Act contains extensive provisions in relation to reselling the right to reside. These provisions will apply where the Scheme Operator has controlling right to sell the right to reside. These provisions will not apply if the Scheme Operator does not have a controlling right to sell the right to reside and the provisions contained in the Residence Contract will govern the resale process. Further, if the Residence Contract contains provisions that are more beneficial to the Resident in terms of reselling the right to reside, those provisions will apply instead of the Act.”
[14]As previously noted section 37(3) of the RVA provides that if a provision of a PID is inconsistent with a provision of any other part of the residence contract the provision that is more beneficial to the resident prevails.
[15]There are three areas of inconsistency between the lease, PID and the RVA.
[16]The first area of inconsistency between the lease and the PID relates to reinstatement work. The provisions of clause 9.1 of the lease require the resident to bring the apartment to a state of good repair, fair wear and tear excepted, upon termination of the lease. Clause 1.4.3 of the PID, which the second respondent relies upon, requires new carpets and repainting upon a resident vacating a unit. I find that the terms of the lease are more beneficial than the terms of the PID in relation to the cost of reinstatement.
[17]It is also necessary to consider section 62 of the RVA which relevantly provides that if a former resident caused accelerated wear or damage to the unit, then the former resident must pay for reinstatement work. Otherwise payment for reinstatement work is to be in accordance with the residence contract. I do not consider there is satisfactory evidence before me in relation to the state of repair of the unit at the date of termination or whether the applicant caused accelerated wear and tear. I am prepared to proceed on the basis of a requirement for painting in accordance with a 2006 quote in an amount of $1,958.00. This sum is conceded by the applicant.
[18]The PID provides for payment of an Exit Fee. The mode of calculation is set out at clause 3.10. It appears the applicant has mistakenly referred to clause 2.10 of the PID (which is not relevant). The exit fee is said to be “a percentage of the Ingoing Contribution paid by the New Resident for the purchase of a lease for your accommodation unit”. In circumstances of termination of the right to reside by the second respondent pursuant to section 53 of the RVA and clause 6.3 of the lease, giving rise to an entitlement to payment pursuant to clause 8.2 of the lease, there is no ingoing contribution by a new resident on which the Fee could be based. The Exit Fee in the PID has no application to the facts before this Tribunal. It is not necessary for me to decide the point, however, the Exit Fee may have application in the circumstances set out in clause 8.1 of the lease when the resident gives notice of termination of the lease to the owner and the owner thereafter enters into a lease with a new resident.
[19]I do not consider the RVA adds anything to this analysis referring as it does at section 15 to an amount which may be payable under a residence contract.
[20]The next potential area of inconsistency relates to the calculation of an “Exit Entitlement” at clause 3.14 of the PID. It is appropriate to compare the mode of calculation set out at clause 3.14 of the PID with clause 8.2 of the lease. I find that the lease is more beneficial because it does not require the deduction of 33% of capital gain, in addition to charges for levies, termination costs and reinstatement costs which are largely equivalent categories across the two documents. The PID requires deduction of 33% capital gain.
[21]The second respondent in seeking to offset a sum for capital gain relies on section 8.1(iii) of the lease and clause 3.14 of the PID. The applicant submits the deduction of 33% of capital gain is not reasonable nor appropriate and not permitted by the RVA, because the RVA envisages sale price less the exit fee. These submissions do not appear to me to be to the point. I have previously found that clause 8.1 of the lease is not relevant. I have found that clause 8.2 of the lease is more beneficial than clause 3.14 of the PID and that it prevails.
Calculation of amount owing upon termination
[22]Clause 8.2.2 of the Lease provides that if, within 14 days of the date of termination the Owner has not entered into a new lease of the Apartment or the new resident has not taken up occupation of the Apartment, then the Owner, with in a period of one month of the date of termination shall pay to the Resident an amount equal to the fair market value less:
i. the deferred management fee as if a resale of the lease had taken place on the date of calculation of the fair market value in accordance with this sub-cluse (but which is not to exceed the maximum deferred management fee);
ii. costs of any repairs required to the Apartment not attributable to fair wear and tear and in accordance with Clause 9.1;
iii. any outstanding resident’s proportion of operating costs;
iv. all costs to the owner of and incidental to the registration of the surrender of this lease or the appropriate record of death;
v. the residents proportion (if any) of the costs of the valuation referred to in Clause 8.2.3.1.
[23]The 13 July, 2011 Decision found that the “Fair Market Value” of the right to reside was $121,500.00 as assessed by Knight Frank in its September, 2006 valuation and as acknowledged by the lawyers for the second respondent to represent the agreed re-sale value of the right to reside.
[24]“Deferred Management Fee” is defined in the Lease to mean an amount equal to 2% of the Lease Purchase Price per annum from the date of commencement of Lease until the re-sale of the Lease of the Apartment. I calculate that sum to be 2% of $81,750.00 over a term of 3,842 days (the period from the date of commencement of the lease – 30 January, 1996 to the date of calculation of the fair market value – 7 August, 2006), being $17,210.05.
[25]“Maximum Deferred Management Fee” is defined to mean 20% of the Lease Purchase Price. I calculate that sum to be 20% of $81,750.00, being $16,350.00.
[26]Clause 9.1 of the lease provides that the resident shall maintain the apartment in good repair, fair wear and tear excepted. The owner is entitled to deduct from any moneys otherwise payable by the owner to the resident such sum as is required to reinstate the apartment to the same state of good repair and condition as when the lease commenced, fair wear and tear exempted.
[27]The only evidence before me in relation to the state of repair of the unit at around the time of termination of the right to reside is the quote in relation to repainting in the sum of $1,958.00, provided as part of the applicant’s submissions dated 14 October, 2011.
[28]The quote on which the second respondent relies is given by Chardy’s Complete Home Maintenance, dated 10 August, 2011, some 5 years after the right to reside had been terminated and after the unit had been unoccupied for that length of time. Because of the length of time involved, I do not consider it gives a fair indication of the state of repair of the unit at the date of termination and therefore do not intend to rely upon it as evidence of an amount the applicant is obliged to pay to the second respondent.
[29]“Operating costs” is defined to mean: “(to the extent to which the same are not specifically payable from time to time by the Resident) the aggregate cost of all fees, costs and expenses of the Owner and/or manager properly assessed, charged or payable … in the operation, running, management, maintenance and administration of the Village during each financial year…”
[30]The second respondent seeks to offset the sum of $3,765.00, in accordance with a tax invoice dated 24 March, 2011. The claimed sum is unparticularized, other than it is said to be: “Adjusted levies prior years – CTTT Order VH 009-07 to recast budgets.” The second respondent has not pointed to any statutory or contractual entitlement to claim levies, 5 years after termination of the right to reside, on which I could base a finding that the sum should be deducted from the “fair market value”.
[31]Drawing from the evidence and the information provided in the parties submissions, I calculate the amount due to the applicant pursuant to clause 8.2 of the lease to be $102,329.50:
Fair Market Value: $121,500.00
Less
Maximum Deferred Management Fee $ 16,350.00
Costs of repairs as at 4 June, 2006
(Quotation from Chris Laube, Painter, dated
4 June, 2006 $ 1,958.00
Outstanding proportion of Operating Costs Nil
Registration fee for surrender of lease $ 450.00
Resident’s proportion of valuation fee $ 412.50
$102,329.50
[32]I find that the calculation set out above in accordance with clause 8.2 of the lease reflects the payment which the second respondent is obliged to make to the applicant.
Costs
[33]The applicant seeks standard costs on the District Court Scale. The second respondent argues that each party should bear their own costs.
[34]This proceeding was commenced in the former Commercial and Consumer Tribunal. The functions of that Tribunal are now largely performed by the Queensland Civil and Administrative Tribunal. More recently this Tribunal has determined that pending proceedings such as this proceeding, should have costs issues determined under the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).[i]
[35]The QCAT costs provisions relevantly provide at section 100 that “Other than as provided under this Act or an enabling Act, each party to a proceeding must bear the party’s own costs for the proceeding.” Section 102 of the Act provides that the Tribunal may make an order for costs if the Tribunal considers the interests of justice require it. Relevant considerations set out in s 102(3) of the QCAT Act include:
· whether a party is acting in a way that unnecessarily disadvantages another party;
· the nature and complexity of the dispute;
· the relative strengths of the claims made by each party;
· the financial circumstances of the parties; and
· anything else the tribunal considers relevant.
[36]Justice Wilson in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2)[ii] said:
“Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‘the interests of justice’ point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s100”.
Applicant’s submissions
[37]The applicant submits that she has at all times acted reasonably, however the respondent has not acted reasonably, particularly in terms of actions taken prior to proceedings commencing.
[38]The applicant says that she is 87 years of age and has incurred significant costs in the proceedings.
Second respondent’s submissions
[39]The second respondent submits that each party should bear their own costs as contemplated by section 100 of the QCAT Act.
[40]It is submitted that the applicant’s conduct prior to commencement of proceedings was unreasonable in relation to obtaining valuations and attempts to sell the right to reside.
[41]It is said that the applicant could have been represented by her daughter and that she has incurred significant costs of her own free will.
[42]Finally it is said that it would be an act of injustice and against the Act for the second respondent to pay legal costs.
Analysis
[43]Neither party directly addresses the matters set out in section 102(3) of the QCAT Act.
[44]However, based on the material before me and the submissions made I find that:
(a) Neither party has acted in the course of the proceedings in a way which has unnecessarily disadvantaged the other. I do not think the conduct of either party which has led to the dispute and the need for the proceedings is the conduct to which s 102(3)(a) of the QCAT Act is directed.
(b) The matter is complex given the interplay between an old form of lease and the legislation. The material and submissions before the Tribunal are lengthy. Both parties were granted a right of legal representation and both parties have relied upon lawyers to make submissions in this matter. I note that in the Ralacom case Wilson J referred to the Court of Appeal decision of Tamawood Pty Ltd & Anor v Paans[iii] and noted the relevance of the decision of Keane JA that where the complexity of the matter justified legal representation, it would not be in the interests of justice to bar the successful party form recovering costs that were reasonably necessary to achieve a satisfactory outcome.
(c) The applicant’s case was strong relative to the second respondent’s case, given the clear terms of the lease and her entitlement to payment of fair market value of the right to reside (less certain fees and charges) upon termination of the lease by the second respondent.
(d) The applicant has incurred considerable cost in conducting the proceeding, although there is no evidence before me as to the financial circumstances of the applicant.
(e) The applicant is a woman of very advanced years. She has had to prosecute this matter over a long period of time and has not had access to money which crystallized as an entitlement in 2006.
[45]For these reasons I consider that it is in the interests of justice that the applicant be awarded her costs of the proceeding.
Orders
[46]I order that:
[1]Milstern Retirement Living Pty Ltd ACN 010661079 pay to Ms Judith Cecilia Taylor the sum of $102,329.50, within 21 days of the date of this Order.
[2]Milstern Retirement Living Pty Ltd ACN 010661079 pay Ms Judith Cecilia Taylor’s costs of and incidental to the proceeding on the standard basis of assessment in accordance with the District Court Scale of Costs.
[3]If the amount of Ms Taylor’s costs are not agreed between Ms Taylor and Milstern Retirement Living Pty Ltd within 14 days, the costs are to be assessed by Hickey & Garrett, Legal Costs Consultants, Level 21, 141 Queen Street, Brisbane at the cost of Milstern Retirement Living Pty Ltd.
[4]Milstern Retirement Living Pty Ltd is to pay Ms Taylor’s costs (as agreed or assessed) within 14 days of such agreement or assessment.
[i]Hallett & Ors v Queensland Building Services Authority [2011] QCAT 355; Queensland Building Services Authority v Johnston [2011] QCATA 265.
[ii] [2010] QCAT 412.
[iii] [2005] QCA 544.
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