Taylor v Milstern Retirement Services Pty Ltd
[2011] QCAT 369
•13 July 2011
| CITATION: | Taylor v Milstern Retirement Services Pty Ltd and Anor [2011] QCAT 369 |
| PARTIES: | Ms Judith Cecelia Taylor |
| v | |
| Milstern Retirement Services Pty Ltd Milstern Retirement Living Pty Ltd |
| APPLICATION NUMBER: | VH006-09 |
| MATTER TYPE: | Other civil dispute matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Ms Ann Fitzpatrick, Member |
| DELIVERED ON: | 13 July 2011 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The second respondent pay to the applicant an exit entitlement in the sum of $121,500.00 less fees and charges required to be deducted in accordance with the lease between the parties, the Public Information Document or the Retirement Villages Act 1999. 2. The respondents file and serve by 28 July 2011: (a) a calculation of the amount for fees and charges which they say should be offset against the sum of $121,500.00 together with supporting submissions and documents; and (b) any submissions in relation to costs. 3. The applicant file and serve by 11 August 2011: (a) any response by 11 August 2011; and (b) any submissions in relation to costs. 4. The respondents file and serve any reply limited to matters raised in the applicant’s response, not previously addressed by it, by 17 August 2011. |
| CATCHWORDS: | Exit entitlement Retirement Villages Act 1999 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard on the papers, pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
Introduction
This application is made pursuant to the Retirement Villages Act 1999 (the RVA).
Judith Taylor is a former resident of Urimbirra Retirement Village, 419 Boat Harbour Drive, Torquay, Queensland. She was the lessee of unit 19 at the retirement village.
The registered owner of the retirement village recorded in the lease document is Milstern Retirement Living Pty Ltd ACN 010661079. It was at all material times the registered scheme operator. By order made on 21 July 2010 the company was joined as a second respondent to these proceedings. The first respondent in this application is Milstern Retirement Services Pty Ltd ACN 002053018. The lease records this company as the “Manager”.
This application was originally filed on 20 August 2009 in the Commercial and Consumer Tribunal. Subsequently amended pleadings have been filed by all parties. The applicant seeks the following orders:
(a)an independent valuer be appointed, pursuant to section 194(3) of the RVA, to provide a valuation of the right to reside in the unit;
(b)the second respondent pay to the applicant the exit entitlement based on the valuation, within 30 days of the respondent receiving the valuation; and
(c)the first and second respondent pay the applicant’s costs.
The applicant asserts that she is entitled to the orders sought pursuant to section 171 of the RVA, because she has been materially prejudiced by a contravention or failure on the part of the respondent to comply with section 67(2) of the RVA.
The respondents seek the following orders:
(a)an independent valuation be obtained under section 70(2) of the RVA; and
(b)each party bear their own costs.
In the respondents amended submissions dated 23 August 2010, they agreed to pay all costs associated with the engagement of an agreed local valuer (not Knight Frank). They further agree that an updated valuation will be deemed the agreed resale value of the right to reside. At paragraph 57(b) of the amended submissions the respondents agree to purchase the unit at an agreed fair market value and at paragraph 57(d)(ii) suggests that it would be a just order that it be ordered to pay the applicant her exit entitlement within 30 days of the agreed resale value being accepted.
Background facts
The applicant entered into a lease with the second respondent Milstern Retirement Living Pty Ltd, dated 22 January 1996.
At the time the lease was entered into, the Retirement Villages Act 1988 was in force. That Act was repealed by the RVA.
Pursuant to the lease, the applicant paid a “lease purchase price” of $81,750.00 and a “license purchase price” of $3,250.00.
The Application records that:
(a)the applicant has not resided at the Village since 14 August 2004.
(b)she was at the date of the Application 86 years of age.
(c)she resides with her daughter who is her carer, although recently her daughter suffered a cerebral haemorrhage and the applicant and her daughter now care for each other,
(d)she has been unable to sell the right to reside and use the funds from such sale for her maintenance.
The applicant swears in her affidavit, dated 25 February 2010 that a Public Information Document was produced in or about 2005.
The Respondents’ former lawyers, McDuff & Daniel wrote to the applicant on 31 January 2006 flagging an intention to terminate the applicant’s lease pursuant to section 53 of the RVA. McDuff & Daniel indicated that it was the intention of the scheme operator to at some point in the future deregister the Village and in anticipation of taking that step had acquired a large number of the Units. They said that the scheme operator would be interested in purchasing the applicant’s unit for a “reasonable sum”.
By letter dated 20 March, 2006 the respondents’ lawyers gave the applicant notice of termination of her “resident’s rights to reside in the Urimbirra Retirement Village”, pursuant to section 53 of the RVA. The right of residence was terminated effective 20 May 2006.
By letter dated 6 April 2006, McDuff & Daniel advised that their client offered the sum of $41,341.70 “for the right to reside over Unit 19…”. That represented a selling price of $59,000.00 less fees of $17,608.30.
Thereafter, Butler McDermott & Egan, Solicitors represented the applicant. By letter, dated 18 April 2006 that firm sought a copy of the valuation relied upon by the retirement village owner.
A residential valuation prepared by Cupitt & Associates Valuers Pty Ltd, dated 19 April 2006 was provided. The lawyers for the retirement village owner indicated the market valuation, in accordance with section 60(c) of the RVA would be set at $55,000.00.
By letter dated 12 May 2006, McDuff & Daniel advised that their client would proceed to sell the unit for what they said was, in accordance with the RVA, a deemed agreed purchase price of $55,000.00. The letter suggested that their client would be the purchaser and advised a “cheque will follow in due course”.
Butler McDermott & Egan disputed the valuation and the process adopted by the retirement village owner.
By letter dated 30 May 2006, the offer to purchase was withdrawn and it was asserted that the applicant would be furnished with demands to effect repairs to the unit.
Following requests by both parties, the Chief Executive of the Department of Tourism, Fair Trading and Wine Industry Development (Chief Executive), appointed Mr Gordon Price of Knight Frank Valuations as registered valuer, under section 70 of the RVA.
A valuation report dated September 2006 was provided by Knight Frank, giving a valuation certificate as at 7 August 2006, of a market value of the right to reside in Unit 19 of $121,500, subject to vacant possession and partial refurbishment.
By letter, dated 26 September 2006 from McDuff & Daniel, the valuation report (together with other reports relating to other residents) was sent to Butler McDermott & Egan and the following statement was made:
“In accordance with the Act the valuations are now deemed to be the agreed re-sale value of the right to reside.”
The retirement village owner said it had no interest in purchasing the unit.
According to the affidavit of the then site manager Mr Garvin, sworn 1 April 2010, the applicant engaged a real estate agent to sell the right to reside for Unit 19, in about mid 2006. The sale price was $120,000.00. The sale signs were allegedly removed after a couple of weeks. Mr Garvin says that the real estate agent told him he would never sell the property at that price. The applicant has given no evidence in this regard, nor is there any evidence from the real estate agent in question.
Eventually, by letter dated 26 June 2007 an auction proposal was put to the applicant. It was suggested that the retirement village owner would proceed to auction the unit. The respondent asserts that the applicant refused to auction the right to reside in the Unit. That is not evident on the correspondence before the Tribunal. There appears to be a long gap before the parties resume correspondence.
Butler McDermott wrote to the retirement village owner on 10 November 2008 requesting information about any sale of the unit. Pursuant to section 67 of the RVA they requested that it reconsider the re-sale value of the right to reside in the Unit.
By letter, dated 10 November 2008, Butler McDermott requested pursuant to section 54 of the RVA a written estimate of the applicant’s exit entitlement.
No response was received to either request and as a consequence this application was filed. The respondent swears that it did not receive these letters.
As part of the proceedings the respondent delivered a valuation of Unit 19 by Cupitt & Associates Valuers Pty Ltd dated 30 April 2009 certifying an “as is” value of $90,000.00 and “on completion” value of $150,000.00.
A mediation occurred on 16 November, 2009. The matter did not resolve.
Thereafter it was ordered that the matter be heard on the papers.
Relevant clauses of the lease
The decision of the Court of Appeal in Williams v Carlyle Villages Pty Ltd (2009) QCA 301 emphasized the primacy of the residence contract and noted that although the RVA required certain matters to be addressed in the contract, the RVA did not prescribe the content of the residence contract.
In this matter, the residence contract is the lease.
The lease provides:
(a)Clause 6 – Departure From The Village
Clause 6.3 – Termination By Owner
Clause 6.3.7 “If the Resident fails to occupy the Apartment for a period of six (6) months without interruption provided all reasonable efforts have been made by the Owner to locate the resident … Then … it shall be lawful for the Owner to determine this Lease by 14 days notice to quit … and the estate of the Resident hereunder shall cease and determine … PROVIDED THAT nothing in this clause shall affect the right of the Resident to be paid any sum pursuant to sub-clause 8.2 hereof less any amounts which the Owner shall be entitled to deduct therefrom.”
(b)Clause 7 “Re-Leasing the Apartment” and clause 7.3 “Auction of Lease”, apply when the resident gives the owner a notice of termination.
(d) Clause 8.2 – Amount Due To Resident On Other Termination
“Where the Owner terminates the Resident’s lease in accordance with its power to do so contained in Clause 6.3 hereof or otherwise in accordance with its rights at law, then:- … clause 8.2.2 if, within the aforesaid period of fourteen (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 so taken up occupation of the Apartment, then the Owner, within a period of one (1) 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-clause (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 residents 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 tin clause 8.2.3.1
Clause 8.2.3 Fair Market Value
For the purpose of Clause 8.2.2:-
8.2.3.1A Fair Market Value shall be deemed to be such amount as is agreed upon between the Resident and the Owner provided if the Resident and the Owner are unable to agree on the amount of the Fair Market Value, the question shall be determined by an independent valuer agreed upon between the Owner and the Resident or, if the Owner and the Resident cannot agree, then by an independent valuer appointed for the purpose by the President for the time being of the Queensland Branch of the Australian Institute of Valuers. The costs of the valuation shall be borne by the resident; or
8.2.3.2In the event that the Owner has within the aforesaid period of one month entered into a new lease of the Apartment, the Market Value shall be the Lease Purchase Price payable by the resident under the new lease.”
Relevant legislation
The lease between the applicant and the second respondent, Milstern Retirement Living Pty Ltd was entered into on 22 January 1996. At that time the relevant legislation governing retirement villages was the Retirement Villages Act 1988. That Act was repealed by the Retirement Villages Act 1999 (the RVA). The RVA contained transitional provisions such that an existing retirement village scheme is taken to be registered under the RVA if the scheme was approved under the repealed Act and the approval is in force.
The RVA was amended by the Retirement Villages Amendment Act 2006 No. 6. I intend to refer to the provisions of the RVA in the form it took as at the date of termination of the right of residence on 20 May 2006, as being the applicable legislation. The following sections are relevant.
“Section 10 – What is a residence contract
(1)A residence contract is 1 or more written contracts, other than an excluded contract, about residence in a retirement village entered into between a person and the scheme operator…
(4) To be a residence contract a contract must-
(a) either-
(i) purport to give a person, or give rise to a person having, an exclusive right to reside in an accommodation unit in the retirement village; or
(ii) provide for, or give rise to, obligations on a person in relation to the person’s or someone else’s residence in the retirement village; and
(b) purport to give a person, or give rise to a person having, a right in common with other residents in the retirement village, to use and enjoy the retirement village’s communal facilities; and
(c) contain or incorporate –
(i) a service agreement …
(d) restrict the way in which, or the persons to whom-
(i) the right to reside in the retirement village may be disposed of during the resident’s lifetime; …”.
“Section 11 – What is an existing residence contract
An existing residence contract is a residence contract existing immediately before the commencement of this Act.”
“Section 13 – What is a public information document
A public information document, for a stated retirement village scheme, is a document, in the approved form under section 74, giving details about the retirement village scheme.”
“Section 14 – What is an ingoing contribution
(1)An ingoing contribution is the amount payable by a person under a residence contract to secure the person’s, or someone else’s, right to reside in a retirement village, but does not include a recurrent payment for rent, fees or charges.
(2)It is immaterial whether –
(a)the right to reside in the village is enforceable or not; or
(b)the payment alone secures the right, or something else is also required to secure it.”
“Section 15 – What is an exit fee
(1) An exit fee is the amount that a resident may be liable to pay to, or credit the account of a scheme operator under a residence contract arising from –
(a)the resident ceasing to reside in the accommodation unit to which the contract relates; or
(b)the settlement of the sale of the right to reside in the accommodation unit.
(2) The exit fee for a residence contract, including an existing residence contract, that a resident may be liable to pay to, or credit the account of, the scheme operator is to be calculated as at –
(a)the day the resident ceases to reside in the accommodation unit to which the residence contract relates; or…
(3) Subsection (2) applies despite anything to the contrary in an existing residence contract.”
“Section 16 – what is an exit entitlement
(1)An exit entitlement is the amount that a scheme operator may be liable to pay to or credit the account of, a former resident under a residence contract arising from –
(a)the resident ceasing to reside in the accommodation unit to which the contract relates; or
(b)the settlement of the sale of the right to reside in the accommodation unit.
(2)In this section, a reference to a former resident includes a reference to a person, other than a scheme operator, who enters into a residence contract for the purpose of giving someone else a right to reside in the retirement village.”
“Section 21 – what is a retirement village dispute
(1)A retirement village dispute is a dispute between a scheme operator and a resident of a retirement village about the parties’ rights and obligations under the resident’s residence contract or this Act.
(2)For subsection (1), a retirement village dispute includes a dispute about compliance by a scheme operator or a resident with this Act, whether or not a particular failure to comply is an offence against this Act.
(3)In this section –
Resident includes a former resident.”
“Section 22 – What is a retirement village issue
A retirement village issue is –
(a) a retirement village dispute; or
(b) an application for an order under sections 169 to 171 or 173.”
“Section 23 – Application of Act
This Act applies to –
(a)a retirement village scheme, including a scheme for a retirement village to which the Body Corporate and Community Management Act 1997 applies, the scheme operator and inducements and invitations to enter into the scheme if –
(i)the retirement village is, or is to be, situated in the State, irrespective of where the scheme is operated or inducements or invitations to enter into the scheme are given or published; or
(ii) the scheme is operated in the State, irrespective of where the retirement village is, or is to be, situated or inducements or invitations to enter into the scheme are given or published; and
(b)a residence contract entered into before or after the commencement of this section, unless this Act states otherwise.”
“Section 37 – Public information document forms part of residence contract
(1)a public information document for each resident is taken to form part of the resident’s residence contract to which the public information document relates…
(3) If a provision of a public information document is inconsistent with a provision of any other part of the residence contract, the provision that is more beneficial to the resident prevails.
(4) If a provision of a public information document is inconsistent with a provision of this Act, the provision of this Act prevails.”
“Section 53 – Termination by scheme operator
(1)a scheme operator may terminate a resident’s right to reside in the retirement village by giving the written notice required by this section to the resident…
(2)The scheme operator must give the resident 2 months notice if the resident’s right to reside in the retirement village is to be terminated on any of the following grounds –
(a)…
(b) the scheme operator reasonably believes the resident has abandoned the resident’s right to reside in the retirement village;…”.
“Section 54 – Resident may ask for estimate statement of resident’s exit entitlement
(1)This section applies if a resident gives a scheme operator a written notice –
(a)stating the resident is considering terminating the resident’s right to reside in the retirement village under section 52; and
(b)asking the operator to give the resident a written estimate of the resident’s exit entitlement as at the date of the notice.
(2)The scheme operator must comply with the request within 14 days after it is given…”.
“Section 57 – Application of div 5 (Reselling resident’s right to reside)
(1)This division applies if a resident’s right to reside under a residence contract, including an existing residence contract, in an accommodation unit in a retirement village is terminated under this Act.
(2)This division applies despite anything to the contrary in an existing residence contract.”
“Section 60 – Scheme operator and former resident to agree on resale value of accommodation unit
(1)Within 30 days after the termination date, the former resident and the scheme operator are to negotiate in good faith and, if possible, agree in writing on the resale value of the right to reside in the accommodation unit.
(2)If the former resident and the scheme operator can not agree on the resale value of the accommodation unit the scheme operator is to obtain a valuation of the right to reside in the unit from a valuer within a further 14 days.
(3)A valuation obtained under subsection (2) is taken to be the agreed resale value of the right to reside in the accommodation unit.”
“Section 62 – Who pays for work in leasehold or licence scheme
…
(2)If the former resident obtained the interest before the commencement of the 2006 amendment Act, section 26, the cost of the labour and materials for the reinstatement work for the accommodation unit must be paid by –
(a)to the extent the reinstatement work is required because the former resident caused accelerated wear to the accommodation unit’s interior or deliberate damage to the accommodation unit – the former resident; or…
(c) otherwise –
…
(ii) for an existing residence contract – the former resident and the scheme operator in the same proportion as they are to share the gross ingoing contribution on the sale of the right to reside, as provided for in the residence contract.”
“Section 63 – When former resident’s exit entitlement payable
(1)A scheme operator must pay the exit entitlement of a former resident to the person entitled to receive it on or before the sooner of –
(a)the day when it must be paid under the former resident’s residence contract; or
(b)14 days after the settlement day…
(3)At the same time as an exit entitlement is paid under this section, the scheme operator must give the former resident a written statement showing how the exit entitlement was worked out and the particulars of any of the following that are payable by the former resident - …
(4)In this section –
Settlement day means the day on which the sale of the right to reside, to a new resident or the scheme operator, is settled.”
“Section 64 – Units not sold within 6 months
(1)This section applies if –
(a)a former resident’s right to reside in a particular accommodation unit is not sold within 6 months after the termination date; and
(b)the former resident has not been paid an exit entitlement under section 63.
(2)The former resident may engage a real estate agent to effect the sale of the right to reside in the accommodation unit.”
“Section 67 – Updating agreed resale value
(1)This section applies if –
(a)a former resident’s right to reside in a particular accommodation unit is not sold within 6 months after the termination date; and
(b)the former resident has not been paid an exit entitlement under section 63.
(2) The former resident and the scheme operator are to reconsider the resale value of the right to reside at least every 3 months and, if possible, agree in writing on a new resale value, which may be the same value.
(3)If the former resident and the scheme operator can not agree on the resale value of the accommodation unit, the operator is to obtain a valuation of the right to reside in the unit from a valuer within a further 14 days.
(4)A valuation obtained under subsection (3) is taken to be the agreed resale value of the right to reside in the accommodation unit.”
“Section 70 – Valuer
(1)For this division, the valuer of the resale value of the right to reside in the unit must be a person who –
(a)is a registered valuer; and
(b)is agreed on by the scheme operator and the former resident.
(2)if the scheme operator and the former resident can not agree on the valuer –
(a)the scheme operator or the former resident must immediately tell the chief executive by written notice; and
(b)the valuer is to be a registered valuer decided by the chief executive within 14 days after the chief executive receives the notice mentioned in paragraph (a)…”
“Section 171 – former resident may apply for order for payment of exit entitlement
(1)This section applies if –
(a)a retirement village scheme operator fails to comply with section 58 (2), 60(2), 65 or 67(2); and
(b)a former resident of the retirement village is materially prejudiced by the failure.
(2)The former resident may apply to the tribunal for an order that the operator pay to the former resident the former resident’s exit entitlement.”
“Section 191 – Tribunal orders generally
(1)The tribunal may make the orders the tribunal considers to be just to resolve a retirement village issue.
(2)For example, the tribunal may make any 1 or more of the following orders –
(a)an order for a party to the issue to do, or not to do, anything (an enforcement order);
(b)an order requiring a party to the issue to pay an amount (including an amount of compensation ) to a specified person (a payment order);
(c)an order that a party to the issue is not required to pay an amount to a specified person;
(d)if the issue is a retirement village dispute –
(i) an order setting aside the mediation agreement between the parties to the dispute; or
(ii) an order giving effect to a settlement agreed on by the parties to the dispute.
(3)An order may specify a time for compliance with it.
(4)Without limiting subsection (1), this section applies if a resident applies for a tribunal order under section 169, 170 or 171.”
“Section 194 – Tribunal orders under section 171
(1)This section applies if a resident applies for a tribunal order under section 171.
(2)In ordering a scheme operator to pay the exit entitlement to the former resident, the tribunal must base the exit entitlement on the following –
(a)if the resale value of the right to reside in the unit has been agreed under section 60 or 67 – that value; or
(b)if the resale value of the right to reside in the unit has not been agreed – the resale value of the right to reside in the unit decided by the tribunal under subsection (3).
(3) For subsection (2) (b), the tribunal must obtain an independent valuation of the right to reside in the unit from a valuer.”
“Section 210 – Tribunal’s jurisdiction
(1)The tribunal has jurisdiction to hear retirement village issues, other than a retirement village dispute –
(a)…
(b)If the amount, value or damages in dispute is more than the monetary limit of the District Court within the meaning of the District Court Act 1967, section 68…”
“Section 237 – Retirement Villages Act 1988 references
In an Act or document, a reference to the Retirement Villages Act 1988 may, if the context permits, be taken as a reference to this Act.”
“Section 237A – Exit fees
(1)This section applies if, before the commencement of this section –
(a)a resident had ceased residing in an accommodation unit; and
(b)the resident had not paid the exit fee under the residence contract to the scheme operator.
(2)For calculating the exit fee the resident may be liable to pay to, or credit the account of, the scheme operator, section 15 and any relevant definitions, as in force immediately before the commencement, continue to have effect.”
Applicant’s and Respondents’ submissions
Applicant
The applicant relies upon sections 171, 191 and 194(3) of the RVA for the Orders she seeks.
The applicant says that she may seek an order from the Tribunal under section 171 of the RVA for an order for payment of her exit entitlement where :
· there has been non-compliance with section 67(2) of the RVA (by the second respondent failing to reconsider the resale value at least every 3 months); and
· she is materially prejudiced by the failure, in that she cannot use the proceeds of sale. Further, she is materially prejudiced because she cannot sell the right to reside due to the actions of the First and Second Respondents, in making public an intention to sell the retirement village.
The applicant submits that the Tribunal must under section 194(3) of the RVA obtain an independent valuation of the right to reside in the unit from a valuer, before the Tribunal can order the second respondent to pay the applicant the exit entitlement. The applicant says that given the history an updated valuation by Knight Frank would be appropriate.
Respondents
The Respondents in their amended submissions filed 24 August 2010, submit that the second respondent has no obligation to pay the applicant the exit entitlement based on section 171 of the RVA as the respondent has not failed to comply with sections 58(2), 60(2),65 or 67(2). In relation to section 67(2) it is said that the respondents attempted to reach agreement with the applicant through communications with their lawyers.
This is a different submission to that made earlier in the first respondent’s submissions filed on 14 April 2010, where a breach of s 67(2) was acknowledged. The first respondent submitted that for the applicant to succeed the failure to comply with section 67 of the RVA must be the “sole” or “main or substantial cause of the material prejudice”. The first respondent maintained that the applicant’s own actions in failing to sell the right to reside herself, failing to consent to auction and insisting on an unattainable price were the cause of prejudice to her.
The second respondent now says that section 194 of the RVA does not apply as the respondent has not failed to comply with section 171.
However, the second respondent agrees to an independent valuation obtained under section 70(2) of the RVA. That involves notification to the Chief Executive by the parties, but that is not further addressed in the submissions.
The second respondent opposes the engagement of Gordon Price of Brisbane based Knight Frank to provide an updated valuation. The second respondent says that Knight Frank are not experienced in the local vicinity and the valuations provided by Mr Price in September 2006 were unrealistic. It said that the valuation:
(a)failed to mention previous sales in Urimbirra Retirement Village including sales through estate agents, including Mr Green’s unit sold by an estate agent on the open market for $65,000.00 in 2002;
(b)failed to consider a statement in the Public Information Document that says the retirement village will be closing down;
(c)failed to consider the recent and ongoing negative publicity that Urimbirra had received;
(d)failed to consider all factors of the leasehold interest including the uncertainty of the lease, the tenure of the lease, the prospect of maintaining equity/value in any lease negotiation, etc;
(e)failed to discuss with the Village manager the conditions prevailing in the Village or the effect the bad publicity had including Mr Boyce telling the Retirement Village Association that Urimbirra was the “worst retirement village in Queensland”; and
(f)the valuations compared superior units, particularly those outside Hervey Bay, which are not directly comparable and valued units with buyback provisions and church-owned units.
The second respondent has submitted:
· that it will engage one of three nominated local valuers,
· that it will pay all costs associated with the engagement of an agreed alternative local valuer; and
· that the valuation be deemed the agreed resale value of the right to reside of the Unit.
Applicant
The applicant submits that her right to payment of the exit entitlement, in accordance with clause 8.2 of the Lease crystallized upon the expiration of one month following the termination of the lease. She says that the agreed re-sale value of the unit was determined by the valuation of Knight Frank, dated September 2006, which was said by the lawyers for the respondents to be deemed to be the agreed re-sale value of the right to reside, in their letter dated 26 September, 2006. She further says that although the valuations of Knight Frank were deemed the agreed resale value of the Unit, the First Respondent later chose to withdraw its offer to purchase the unit.
The applicant submits while the right to reside has not been sold, this is solely due to the conduct of the respondents and the applicant has suffered material prejudice as a result.
Respondents
On this point, the respondents’ position is put differently on a number of occasions. At paragraph 21 of the respondents’ amended submissions, the respondents say that the applicant’s right to payment of the exit entitlement crystallises one month after fair market value is agreed. They say that fair market value has not been agreed. At paragraph 42 of the amended submissions, the respondents submit that the exit entitlement is payable one month from the date of termination. At paragraph 57(d)(ii) of the amended submissions the respondents say that the it would be just for the respondent to pay the applicant her exit entitlement within 30 days of an agreed resale value being accepted as part of a process whereby another valuation is obtained.
The respondents say that their lawyers McDuff & Daniel only agreed that the valuation of $121,500.00 determined by Knight Frank, “was deemed to be the agreed resale value of the right to reside in accordance with the Act. The Respondent has never agreed to the valuations as an indication of real market value.”
They say that as the Act is more beneficial to the applicant than clause 8.2 of the lease the value must be agreed under section 60 of the Act. It is not explained how the Act is more beneficial than the lease, which provides a certain date for payment of the exit entitlement, not dependent on sale. The respondents say that the unit could not be sold, and the exit entitlement could not be paid, as the applicant and respondent could not agree on a valuation.
The second respondent says that it had no intention of closing down Urimbirra but was directed by the Office of Fair Trading to include the statement in the 2006 Public Information Document. It says the unit has not sold because the applicant refused to accept a fair market price. Estate agents who handled the unit were unable to obtain the price the applicant wanted.
The respondents say that the applicant has not suffered any material prejudice as a result of a failure by the respondent to comply with the Act. Material prejudice suffered by the applicant is a result of her own action as she:
(a)failed to take steps to sell the right to reside in the unit;
(b)failed to provide consent to allow the respondent to auction the right to reside in the unit; and
(c)insisted on an unattainable price for the sale of the unit.
Applicant
The applicant says that the Tribunal has the jurisdiction to order the second respondent to pay her the exit entitlement based on an updated valuation obtained in furtherance of an order made under section 171 of the RVA. This power is said to be given by section 191 of the RVA and section 171 of the RVA. The applicant refers to the passage in Filmer’s case[i], where Member Spender said:
“In my view, section 191 is not a grant of power in itself, but it confers general power in discharge of the Tribunal’s jurisdiction conferred elsewhere in the RVA or as conferred by the CCT Act”
Respondents
The respondents say that the second respondent has no obligation to pay the applicant the exit entitlement based on section 171 of the Act as the respondent has not failed to comply with the sections of the Act referred to in section 171, including, relevantly, section 67(2).
Finally, the respondents say that the Tribunal ought not make the orders sought by the applicant because they are not “just”.
In its original submissions, the first respondent said that the Tribunal is not bound to make the orders sought, but rather must consider the conduct of the parties and the effect of any order in deciding whether it would be just to make the orders sought.
The first respondent submitted that it was willing to take steps to sell the unit and that it was the applicant blocking the process, being only interested in being paid her exit entitlement.
The first respondent also said that if the applicant succeeded in obtaining an order that she be paid her exit entitlement, the respondent will suffer a material prejudice in having to pay out monies for exit entitlements that it has not yet received from a resale of the right to reside and in circumstances where the respondent has already paid in excess of $140,000.00 in the upkeep of the village because the residents have failed to approve budget increases since 2000. The respondent says that if it is forced to pay exit entitlements based on a market value of an amount close to the Knight Frank valuation, the respondent is unlikely to recover the amount on a future sale. This is supported by the affidavit evidence of Millie Phillips, Director, not on any expert opinion.
Applicant’s and respondents’ further submissions in response to the Tribunal’s directions
The further submissions made in response to the Tribunal’s 14 July 2010 directions were to the effect that:
(a)The applicant said that the RVA currently in force should be applied in determining the outcome of this application, but in any event the relevant sections are the same as at the date of termination of the right of residence on 20 May 2006. The respondents say that the RVA as at 20 May 2006 applies.
(b)The applicant says that the valuation of Knight Frank represents a “fair market value” within the terms of clause 8.2 of the lease as at the time it was conducted, in particular when read with clause 8.2.3. Once an updated valuation is obtained it will then form the fair market value. The respondents say that they did not and do not now accept that the valuation represented a “fair market value” in relation to the purchase of the applicant’s lease, for the reasons set out earlier.
(c)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 Public Information Document (PID) and any inconsistent provision of the RVA which prevails. The respondents 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 Public Information Document to calculate the exit entitlement.
(d)The applicant says that the right to payment of the exit entitlement crystallized one month following termination of the lease. That is on 20 June 2006. The applicant also relies on section 63(2) of the RVA where it provides that the scheme operator is not prevented from paying the exit entitlement before the settlement day. The respondents say that the applicants right to payment of the exit entitlement crystallises one month after fair market value is agreed and that a fair market value has not been agreed.
(e)The applicant says that the obligation to pay the exit entitlement derives from clause 8.2 of the lease, subject to the PID and sections 37 and 45 of the RVA. The applicant did not answer the question posed by the Tribunal as to whether the respondent was bound to pay the exit entitlement calculated in accordance with clause 8.2 of the lease, pursuant to section 63 of the RVA and whether this obligation is able to be enforced by the Tribunal making an Order pursuant to section 191 of the RVA. The applicant says that the requirement to pay the exit entitlement is able to be enforced by the Tribunal. The second respondent says that it is bound to pay the exit entitlement under clause 8.2 of the lease as the terms of the lease are the most beneficial to the applicant.
(f)The applicant says that the PID, exhibit JCT7 to the affidavit of the applicant sworn 25 February 2010 forms part of the residence contract, in accordance with section 37 of the RVA.
(g)She says that the lease at clause 8.2.2 provides how the payment to the resident on termination is calculated. The PID provides at 3.13 how the exit entitlement is to be calculated. The applicant is entitled to the most beneficial provision under section 37(3) of the RVA. The applicant does not submit which is the more beneficial. She says that the unit was left in good repair and that no maintenance costs are payable. Likewise the respondents agree the applicant is entitled to use the most beneficial method in the lease or Public Information Document to calculate the exit entitlement, however they say the unit was not left in good repair and condition and will require expense to place it in a saleable state. There is no further evidence on this point.
Jurisdiction of this Tribunal
This application was filed in the former Commercial and Consumer Tribunal. Relevant functions of that Tribunal have been taken over by the Queensland Civil and Administrative Tribunal (QCAT). Pursuant to section 271 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act), QCAT has and only has the functions that the former Commercial and Consumer Tribunal had in relation to an existing matter such as this, and can only make a decision the former Tribunal could have made in relation to the matter.
Section 8 of the Commercial and Consumer Tribunal Act 2003 provides that the Tribunal has jurisdiction to deal with matters under an empowering Act. The RVA is an empowering Act.
Section 57 of the RVA provides that division 5 of the RVA, which relates to reselling the resident’s right to reside, applies despite anything to the contrary in an existing residence contract. “Existing residence contract” is defined by section 11 of the RVA as a residence contract existing immediately before the commencement of the RVA. That definition will capture the lease in question.
Section 209 of the RVA provides that the Tribunal’s function is to hear “retirement village issues”. This matter is a retirement village issue as defined by section 22 of the RVA, being both a retirement village dispute and an application for an order under section 171 of the RVA.
Section 21 of the RVA defines “retirement village dispute” to include a dispute between a scheme operator and a resident of a retirement village about the parties’ rights and obligations under the resident’s residence contract or the RVA and a dispute about compliance by a scheme operator or a resident with the RVA.
Nature of the dispute, findings and orders
In essence this dispute relates to the fact that the applicant’s right to reside in Unit 19 at the Urimbirra Retirement Village terminated over 5 years ago. The parties are at a stalemate in relation to the value of that right to reside and as a consequence the applicant has not been paid her exit entitlement, pursuant to the residence contract by which she acquired the right to reside and pursuant to section 63 of the RVA.
The applicant contends that the respondent has failed to comply with the statutory process for reaching an agreed value of the right to reside.
The applicant seeks orders arising out of the retirement village issue, pursuant to section 171 of the RVA which gives a former resident an entitlement to apply for an order that the operator pay the former resident her exit entitlement if the scheme operator fails to comply with section 67(2) of the RVA and the former resident is materially prejudiced by the failure.
The applicant relies on her lawyer’s letter to the retirement village owner on 10 November 2008, requesting it reconsider the re-sale value of the right to reside in the Unit, pursuant to section 67 of the RVA as evidence of a failure to comply with section 67(2) of the RVA.
The lawyer for the applicant, Mr Boyce swears in his affidavit made on 26 February, 2010, that the letter was forwarded by facsimile transmission to Milstern Retirement Services Pty Ltd. Ms Phillips, the director of Milstern Retirement Services Pty Ltd, confirms in her affidavit, sworn 1 April 2010, that the facsimile number on the face of the letter is correct, but that she never received the letter. I accept the evidence of Mr Boyce that the letter was sent.
I find that the applicant’s lease and right to reside in Unit 19 was terminated under the RVA, by delivery of a notice under section 53 of the RVA, given on 20 March 2006, effective 20 June 2006. I find that Notice had the effect of terminating the lease in accordance with clause 6.3.
Division 5 of the RVA contemplates a number of steps to be taken by the former resident and the scheme operator when a right to reside is terminated.
The parties largely followed sections 60 and 70 in Division 5 of the RVA, apart from compliance with some time limits, resulting in the provision to the parties of the valuation of Knight Frank, dated September 2006. Under the RVA, that valuation became the “agreed resale value of the right to reside” in Unit 19.
Both parties agree that the Knight Frank valuation was the agreed resale value of the right to reside for the purpose of the RVA. The applicant says that it was also equivalent to the fair market value contemplated by the lease. The respondents reject that contention.
I find that the valuation was the agreed resale value of the right to reside, in accordance with section 60 of the RVA as at the date of the valuation. I find that the respondents are bound by the representation of their lawyers made on 26 September 2006, as to the status of the Knight Frank valuation, being the agreed resale value under the RVA.
I also find that it was a fair market value as contemplated by clause 8.2 of the lease, as at the date of termination. “Fair market value” is defined at clause 8.2.3.1 of the lease to be the amount agreed upon between the resident and the Owner, or failing agreement as determined by an independent valuer agreed upon between the Owner and the resident. Failing agreement an independent valuer is to be appointed for the purpose by the President of the Queensland Branch of the Australian Institute of Valuers.
A number of problems arise from the interaction of the old lease and the RVA. First, the RVA process for agreeing the resale value must be superimposed over the lease process for establishing fair market value, at clause 8.2. That can be done and has largely been done, although the independent person responsible for appointing the valuer is different under the Act to the person nominated under the lease and the Act refers to the concept of “agreed resale value”, whereas the lease refers to the concept of “fair market value”. To give meaning to the lease in the context of the operation of the RVA, I find that following the RVA process to obtain a valuation is consistent with the lease and satisfies its terms. I also find that “agreed resale value” is the same as “fair market value”.
I find that once a fair market value was set under the lease, the applicant became entitled to enforce the terms of her residence contract, for payment of the exit entitlement.
Section 63 of the RVA provides that a scheme operator must pay the exit entitlement of a former resident to the person entitled to receive it on or before the sooner of –
(a)the day when it must be paid under the former resident’s residence contract; or
(b)14 days after the settlement day.
In this case, the sooner date was the date under the lease. Clause 8.2 provides that the “Owner within a period of one (1) month of the date of termination shall pay to the Resident an amount equal to the fair market value”, less certain fees and costs. I find that the applicant’s entitlement to be paid the exit entitlement under the lease crystallised on 20 June 2006. That is consistent with the submissions of the applicant. The respondents appeared to equivocate on the point, but did in some parts of the submissions make this admission.
It cannot be ignored that the residence contract 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 contended for by the respondent. To the extent that the PID provides at clause 1.3.6 that an exit entitlement is payable when the right to reside in the Unit is sold, I find that the terms of the lease are more beneficial and under section 37 of the RVA, the lease prevails.
The applicant did not pursue enforcement of the lease after receipt of the Knight Frank valuation. Instead she sought to sell the right to reside herself and appointed a real estate agent to that end. About a year later, a proposal to auction the right to reside was raised, but not pursued.
Finally, after a further lengthy period of time of almost 18 months, the applicant put in train the process set out in section 67 of the RVA for updating the agreed resale value of the right to reside. It is the alleged failure on the part of the scheme operator to comply with section 67, which gives rise to a statutory claim under section 171 of the RVA for an order for payment of the exit entitlement if the conditions in that section are met.
In considering whether there has been a failure to comply with section 67, I note that the path to section 67 in the RVA seems to be predicated upon a crystallized claim for payment of the exit entitlement arising only after settlement of the sale of the right to reside. Section 63 of the RVA sets out when a former resident’s exit entitlement is payable. There are 2 possible scenarios. Either in accordance with the residence contract or following sale.
If the right to reside is not sold then section 64 gives a resident a right to try and make the sale himself or herself. Section 65 obliges the scheme owner to tell the resident of all offers and section 66 sets out the consequences of a sale at less than the agreed resale value. Section 67 follows with an entirely logical process to keep the resale value current in circumstances where the right to reside is not sold and the exit entitlement has not been paid under section 63.
If the right to payment of the exit entitlement has crystallized before sale and the agreed resale value has been determined at that point, then the parties need no further assistance in reaching a resale value. I find that has occurred on the facts of this case. I find that sections 64, 65, 66 and 67 of the RVA are directed only to the circumstance where the right to payment of the exit entitlement has not crystallized and the scheme owner is obliged to sell the right to reside before the resident receives the exit entitlement.
There may well have been a failure to comply with section 67 of the RVA, however, I do not consider that the second respondent was bound to comply with the section on these facts. On that reasoning I find that section 171 of the RVA is not available to the applicant as a remedy. That being the case, the question arises as to whether this Tribunal can assist the applicant in recovering her exit entitlement in circumstances where section 171 does not apply.
This is not a case such as the one considered in Squire v Chancellor Park Retirement Village Pty Ltd (2003) CCT VO22-02, where there was both a general and a specific provision in the RVA dealing with the same subject matter (provision of false or misleading documents), so that the applicant could only proceed in accordance with the specific provision. In this case the specific provision at section 171 of the RVA, relating to an order for payment of an exit entitlement, only applies in limited circumstances which have not been engaged on these facts. In my view that leaves open a claim for relief under the broad powers of section 191 of the RVA .
In Filmer and Others per Schedule A As in Application lodged on 24 November 2008 v Carlyle Gardens Retirement Village Pty Ltd (2009) CCT VH 007-08, Member Spender found that there was no retirement village dispute under consideration by her. Accordingly no remedy was available to the applicants in that case. I view her discussion of the scope of section 191 of the RVA as arising out of that context. To the extent that Member Spender said that in her view section 191 is not a grant of power in itself, but confers a general power in discharge of the Tribunal’s jurisdiction conferred elsewhere in the RVA, I consider her to mean that there must be a retirement village issue or dispute existing, before section 191 is engaged.
I am of the view that the applicant is entitled to seek an order for recovery of the exit entitlement under the general powers in section 191 of the RVA, in order to resolve the retirement village dispute in which she is involved. If it is found to be just that such an order is made, the order is enforceable against the scheme operator in accordance with section 71 of the RVA by the relevant court. The process for enforcement of Tribunal orders by a court is set out in section 131 and 132 of the QCAT Act.
I am reassured that section 191 of the RVA contains powers which may be called upon by the applicant for these reasons:
(a)Section 210 of the RVA provides that the Tribunal has jurisdiction to hear retirement village issues if the amount, value or damages in dispute is no more than the monetary limit of the District Court within the meaning of section 68 of the District Court Act 1967. That limit is $250,000.00 and is not exceeded by the value of the exit entitlement in this case.
(b)This retirement village issue is therefore within the Tribunal’s jurisdiction in accordance with section 209 of the RVA.
(c)Section 191 is the general power in discharge of the Tribunal’s jurisdiction conferred in the RVA.
(d)Section 191 provides that the Tribunal may make the orders the Tribunal considers to be just to resolve a retirement village issue, including a payment order given by way of example of the Tribunal’s powers. Subsection 4 of section 191 provides that “without limiting subsection (1), this section applies if a resident applies for a Tribunal order under section 169, 170 or 171.” I take the use of the words “without limiting subsection (1)”, to mean that the general power is available to be used and is not eroded by the existence of what might be interpreted as a specific power under section 171 of the RVA. In fact the subsection makes it clear that the general power continues to apply even if a resident applies for a tribunal order under section 171.
The applicant does not submit that she is entitled to an order under section 191 of the RVA, that the second respondent has failed to comply with section 63(1)(a) of the RVA and that the second respondent must pay her the amount of the Knight Frank valuation on the basis that it is the “fair market value” she is entitled to be paid under clause 8.2.3.1 of the lease.
If I am satisfied that is a just resolution of the retirement village dispute before me, that is the order I am inclined to make.
Section 191 is cast in broad terms to give the Tribunal a discretion as to the orders it may make to resolve a retirement village issue. In the exercise of my discretion I am bound to consider what is just.
I am of the view that the parties are bound by the terms of the residence contract. That contract required the scheme operator to pay the resident the fair market value of the right to reside, by 20 June 2006 in circumstances where it had terminated the right to reside and no new lease of the unit had been entered into within 14 days of the date of termination.
A debt in favour of the resident arose at that time. It was a debt capable of calculation. I find that in breach of section 63 of the RVA, the second respondent failed to pay the applicant’s exit entitlement.
The parties appear to have misdirected themselves over time in acting as if the owner must sell the right to reside before the resident is entitled to payment. There also appears to have been a view that the resident was obliged to try to sell the right or to auction the property. Those steps only arose under the lease if the resident terminated the right to reside. That is not the case here.
From the applicant’s point of view there is no contractual or statutory entitlement to have her exit entitlement re-assessed at a later point in time. From the second respondent’s point of view, it too is bound by the bargain it made. Its earlier submissions that it is not fair that it should have to pay an exit entitlement before sale of the right to reside are irrelevant in the face of the terms of the lease.
I do not consider it just for the parties to engage another valuer for the purpose of establishing an agreed resale value. That value may again not suit the respondents, leaving the applicant in the same position.
I order that an exit entitlement be paid to the applicant, being the fair market value of the applicant’s right to reside, in the sum of $121,500.00, as assessed in the Knight Frank valuation, less relevant fees and charges. I consider this to be just because of the advanced age of the applicant and the fact that she has not had the use of a very significant sum of money for years after it fell due for payment. Clause 8.2.1 of the lease contemplates that the fair market value will be paid less certain fees and charges. I have 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.
It does not appear that there is any power under the Commercial and Consumer Tribunal Act 2003 or any express power under the RVA for me to order the payment of interest.[ii]
I order that the respondents file and serve their calculation in relation to the amount of fees and charges under the lease, PID or RVA, which they say should be offset against the sum of $121,500.00 together with supporting submissions and documents by 28 July 2011. They should also file and serve any submissions in relation to costs by that date.
I order that the applicant file and serve any response and submissions in relation to costs, by 11 August 2011.
I further order that the respondents file and serve any reply limited to matters raised in the applicant’s response, not previously addressed by it, by 17 August 2011.
Thereafter a final order will be made in favour of the applicant as to the sum she is entitled to receive as a consequence of the second respondent terminating her right of residence.
[i] [2009] CCT VH007-08, at paragraph 19.
[ii]Hoy, I & J v Milstern Retirement Living Pty Limited ACN 010661079 [2004] QCCTRV 2 (10 February, 2004).
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