Comments on and Responses to the Department of Fair Trading's 2004 Consultation Draft Bill to Amend the Retirement Villages Act 1999
The Department’s proposed amendments are in bold type.
Our responses are in indented and quotations from earlier issues papers, or our responses to them, are in italics.
Amendments of Sections:
13 What is a “Public Information Document” (PID) A
“public information document” for a stated retirement village
is a document in the form provided for under section 74 giving details about the retirement village scheme.
S.13.
This implies that there is one PID for a village. This is not so; there is always a succession of differing PIDs. Scheme operators change them frequently and with each change come ever more unconscionable
terms. The Department will be well aware of this if it reads the new PIDs which it requires scheme operators to provide. A particular PID is therefore of restricted application, restricted to residents of whose contract it forms part; it cannot
be made to apply to earlier contracts or to residents of whose contract it does not form part. Refer to S. 37. Section 13 would be much better left as it is.
Our view is that scheme operators should, in respect of every new PID that they are required to submit to the Department for
registration, sign a declaration that, to the best of their knowledge, it contains no provision which is contrary to the Act; and there should be a penalty. That will make scheme operators, that is their lawyers, ensure that PIDs comply with the
Act. This will significantly reduce the likelihood of residents having to challenge the legality of their contracts in the Tribunal.
15 What is an “exit fee”
(1) An “exit fee” is the amount that a resident may be liable 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, other than 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 the day the resident ceases to reside in the accommodation unit to which the
contract relates.
(3) Subsection (2) applies despite anything to the contrary in an existing residence contract.
(4) In this section, a reference to a resident or a former resident includes a reference to a person who enters into a residence contract for the purpose of giving
someone else a right to reside in the retirement village.’
S.15(1)
We can’t see the point of this change because the Exit Fee is always deducted from the Exit Entitlement and the balance, less other deductions, paid by the scheme operator to the former resident.
Otherwise, we applaud the removal of the distinction between ‘existing contracts and post 1 July 2000 contracts.
S.18
We realise that no amendment is being proposed but we should like to propose one now. Some scheme operators are representing to prospective new residents that they have to pay the “ingoing contribution”
and then a further sum which they are required to pay into the “Capital Replacement Fund”. Then, when the resident leaves the village, the resident’s Exit entitlement is based on the ‘net’ ingoing contribution, exclusive of the amount which the
scheme operator is required to pay into the capital replacement fund. This is downright fraudulent but it has happened and is little doubt still happening. This Association does not get to know of such fraud unless a departing resident tells
us. And such fraud has been reported and demonstrated to this Association. This is more a matter of compliance but our complaint is that the Department does not enforce compliance.
We should like to see this Section at least reworded to distance the in-going contribution from the capital replacement fund. After
all, the capital replacement fund is funded entirely by the scheme operator and it really does not matter how he funds it so long as he does.
36 Scheme operator to give notice about inaccuracy in public information document
(1) This section applies if the particulars in a public information document for a resident become inaccurate in a way
that may materially affect the interests of a resident of the village.
(2) Within 28 days after the scheme operator becomes aware of the inaccuracy or the circumstances causing the inaccuracy, the scheme operator
must make a full written disclosure of the inaccuracy to the chief executive and to each resident who is, or is likely to be, materially affected by the inaccuracy. Maximum penalty for subsection (2) - 540 penalty units.
(3) Also, the scheme operator must make a full written disclosure of the inaccuracy to -
(a) a person who intends signing a residence contract, before the person signs the contract;
(b) a person who has signed a residence contract for which the cooling-off period has not ended, before the end of the cooling-off period. Maximum penalty—540 penalty units.
(4) However, subsection (3)(b) does not apply if the scheme operator has a reasonable excuse for failing to make the disclosure before the end
of the cooling-off period.
‘(5) In that case, the scheme operator must make the disclosure as soon as practicable after becoming aware of the inaccuracy.
(6) The scheme operator must, as soon as practicable after becoming aware of the inaccuracy, amend the public information document to remove
the inaccuracy.’
S.36 (4)
We accept that the penalty should not apply if the scheme operator has a reasonable excuse. (who judges its reasonableness?) But the resident’s ability to revoke the contract must not be prejudiced by the
scheme operator’s failure to notify the resident before the cooling-off period ends. This amendment does so prejudice. If the resident is notified of a change during the cooling-off period, that period should be extended so that it begins again
from when the resident is notified of the change
At sub-section (6), whose or which PID is to be amended?
37 Public information document forms part of residence contract
(1) A public information document (a “PID”) for each resident is taken to form part of the
resident’s residence contract to which the public information document relates.
(2) A notice given to the chief executive and a resident under section 36 is taken to form part of the resident’s residence contract.
(3) 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.
(4) If a provision of a PID is inconsistent with a provision of this Act, the Act provision prevails.
We applaud the new subsection (3) which gives effect to the customary legal view that inconsistencies in a contract are to be resolved to the benefit of the
party which did not draw up the contract.
57 Application of div 5
(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.
(2) This division applies despite anything to the contrary in an existing residence contract.
S.57
Subsection 57(2)
We believe the word ‘existing’ needs to be omitted. Surely the Division applies to all contracts, ‘existing‘, ‘post Act’ and ‘post Amendment Act‘, despite anything to the contrary in a contract, as indicated
at sub-section 57(1). If (2) is left as in the proposed amendment, scheme operators will assuredly argue that it means that anything to the contrary will be allowed in post Act contracts.
58 Necessary reinstatement work
(1) Within 30 days after the termination date, the former resident and scheme operator under a residence contract are to negotiate in good faith and, if possible, agree in writing on any reinstatement work to be done.
(2) If the former resident and scheme operator can not, within the 30 days, agree on the reinstatement work to be done, either of them may give the other an itemised quote for doing what
they consider to be the reinstatement work.
(3) The quote must be from a qualified tradesperson appropriate for the work.
(4) The quote must be given within 44 days after the termination date.
(5) If the former resident and scheme operator still can not agree on the reinstatement work to be done, their failure to agree is a retirement
village dispute.
(6) This section applies to an existing residence contract that is terminated after the commencement of the 2004 Amendment Act.
(7) In this section— “reinstatement work” means the replacements or repairs that are reasonably necessary to be done to reinstate the accommodation unit to a marketable condition having regard to -
(a) the condition of the accommodation unit at the start of the former
resident’s occupation; and
(b) the general condition of other accommodation units in the area
that are comparable with the unit.
S.58 (6)
Given Section 57, application of Division (7), isn’t this sub-section superfluous? As it is, it seems to exclude post Act contracts. See our comments on S.57(2)
“Reinstatement”
Repairs are chargeable to the Maintenance Reserve Fund or to the General Services Fund; replacement is chargeable to the Capital Replacement Fund. This is no less so at the end of a residency than during its
currency. With what is being proposed, any necessary maintenance, repairs or replacements will, unless inescapable, certainly be left until the resident leaves, whereupon the scheme operator will be able to make the resident pay. This is
totally unacceptable. In fact, in addition to what can be regarded as capital replacement, scheme operators often indulge in some capital improvement, re-constructing the bathroom or kitchen for example and charge that to the departing
resident. That of course enhances its sale prospects and the price for which it is sold but the benefits of such improvements rarely reach the ex-resident.
S.59(3)
If a spouse or relative is living in the unit under section 70B, the scheme operator must ensure that the reinstatement work is done with as little inconvenience to the spouse or relative as is reasonably possible.
(4) In this section - "vacation date" of an accommodation unit in a
retirement village, means -
(a ) the date a former resident vacates the unit; or
(b) for a former resident who has vacated the unit before the commencement of this Act, the commencement of this section.
S.59(3)
This is very interesting. The reinstatement work is to be carried out while the new S.70(B) resident is in situ. That is how most of us get our house repainted on the interior; we move the furniture
from room to room while it is being done. Why then cannot it be similarly done under S.58, if the expected notice is given by the resident, while the departing resident is still in situ and there is no S.70B successor?
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.
S.60
Since the exit entitlement, in by far the majority of cases, and increasingly, is related to the ingoing contribution paid by the next lessee, the departing lessee should be aware of how much that is. But the departing resident is very rarely so
aware; no proof is ever advanced. The departing resident is told how much he will get, before the Unit is re-leased and that, usually, is that. We should like to see it made compulsory for departing residents, whose exit entitlement depends on
the next in-going contribution, be given a copy of the receipts given to the succeeding lessee, even though that too is open to trickery.
62 Who pays for work in leasehold or licence scheme
(1) This section applies if the former resident’s interest is a leasehold interest or licence.
(12) If the former resident’s interest is a leasehold interest or licence, the cost of resident obtained the interest before the commencement of the 2004 Amendment Act, the cost of the labour and materials for the reinstatement work must be paid by -
(a) to the extent the former resident caused accelerated wear to the accommodation unit’s interior or deliberate damage to the unit— the former resident; or
(b) if the residence contract states who is to make the payment—the person stated; or
(c) otherwise -
(i) for a residence contract other than an existing resident contract—the scheme operator; or
(ii) for an existing residence contract—the former resident and the scheme operator in the same proportion as they are to share the sale proceeds of the right to reside in the unit on its sale ingoing contribution on the sale of the right to reside, as provided for in
the residence contract.
(3) If the former resident obtained the interest after the commencement of the 2004 Amendment Act, the cost of labour and materials for the reinstatement work must be paid by -
(a) to the extent the former resident caused accelerated wear to the accommodation unit’s interior or deliberate damage to the unit— the former resident; or
(b) otherwise - the scheme operator.
(24) If the scheme operator must pay the cost of reinstatement work, it must be paid out of the operator’s capital replacement fund.
(5) In this section -
“ingoing contribution” means the ingoing contribution before any deductions are made.
S.62
We applaud the decision to make scheme operators entirely responsible for reinstatement in post Amendment Act contracts but it does not go nearly far enough. What happened to the
earlier proposal by the Department that reinstatement was to be made the responsibility of the scheme operator for all contracts, existing or otherwise? Another sacrifice of justice on the scheme operators’ altar.
S.62 (5)
This presumably refers to the incoming lessee’s contribution. But there are lessees whose contracts provide only for the repayment of their own in-going contribution - and no exit fee. Apart from that diminishing number of contracts,
contracts differ widely on exactly how Exit Entitlements are calculated but the Exit entitlement is most often, but not always, based on the incoming lessee’s ingoing contribution. To what deductions is the proposed amendment referring? Of what
significance is ingoing contribution before deductions? Which in-going contribution? The amount to be returned to the resident is determined by deducting the Exit Fee from the Exit Entitlement, however those figures are calculated. If the sale
proceeds are $200,000 and the Exit fee is 30% of that and the reinstatement costs $3,000 then the resident pays 70% of the reinstatement costs ($2,100) and the scheme operator 30% ($900), the resident’s share being deducted from the amount
otherwise to be paid to him, that is after deducting the Exit Fee from the Exit Entitlement. That has to be what is meant but that is not exactly what the amendment says.
Exit Entitlements and Exit Fees are both defined, necessarily loosely, in the Act and neither are defined
in relation to ‘ingoing contribution’. It would be unwise to try legislatively to relate Exit Entitlement to ‘in-going contribution’. The existing S.62(1)(c)(ii) is clear and simple and seems much to be preferred.
This does not of course mean that we accept that residents should be responsible for any of the costs of reinstatement. We believe this
should be the scheme operator’s, that is the landlord’s, responsibility in respect of all contracts, not only post Amendment Act contracts. Why has the abolition of the distinction between
‘existing contracts’ and post 1 July 2000 contracts found at S.15, not been made in this Section? We reproduce below proposals from the Department’s 2003 Issues Paper: (our emphases):
“In the case of a lease/licence arrangement, the operator will bear the reinstatement costs under a post-Act
residence contract, and the operator and resident will share these costs on a proportionate basis under an existing residence contract [s.62(1)(c).
In a lease/licence arrangement, the unit remains an asset owned by the operator and therefore it seems incongruous for a resident under such an arrangement to be liable for
restoration of that asset – particularly when a resident who hold the freehold title to their unit is solely responsible for its reinstatement [s.61].”
And from the March 2004 draft amendments:
“Residence Contracts entered into before the Act commenced
When the Act was introduced, some resident obligations under the previous law continued where a residence contract was already in force at that time. This created a
divide between the law applicable to "existing residence contracts" and contracts entered into after the Act commenced. The amendments proposed in relation to these disparate rights include the following:-
The distinction between "existing" and post-Act residence contracts will be removed. The most significant flow-on changes from this will be:-
The exit fee paid to operators will be calculated as at the date a resident vacates their unit. and will not continue to accrue until the unit is sold;
Where the unit is held under a lease or licence arrangement, the resident will no longer have any liability for the cost of reinstatement, although contrary residence contract
provisions will continue to be recognised.
Any residence contract provision requiring a resident to contribute to capital replacement will no longer be valid; and see (S.94(1)(d)
After 90 days from vacation of the unit, the operator will assume a proportionate liability for the ongoing general services charge.
There has been very strong operator stakeholder objection to this course, on the basis that the changes not only go behind the terms of validly entered-into
contracts, but also jeopardise forward budget planning prefaced on the expected income provided for by such terms. To address these objections, it is proposed to allow a lead-in time (of, say, six months) before the amendments commence, and to
make the amendments apply prospectively (that is, if the event that, triggers the provision, such as vacation of the unit for the purpose of calculating the exit fee, has already occurred, then the existing distinction will continue to apply).
ARQRV response (at that time)
We welcome this removal of the distinctions between “existing” and post Act contracts for which, as the Department knows, this Association was campaigning when the 1999 Act was but a draft Bill. The pity is that those distinctions were ever made
in the first place. Scheme operators have enjoyed the distinctions for almost four years now”.
So, on both papers, the operators have again protested and again the Department has simply capitulated without further reference to this Association. To use the
operators’ expression which the Department has quoted, the Department is ‘going behind validly’ made proposals to residents and quietly withdrawing them. What faith can residents have in the Department of Fair Trading?
68 Costs of selling
(1) The costs of the sale of a right to reside in a particular accommodation unit, including the costs mentioned in sections 60(2) and 67(3), are to be shared by the former resident and the scheme operator in the same proportion as they are
to share the sale proceeds of the right to reside in the unit on its sale ingoing contribution on the sale of the right to reside, as provided for in the residence contract.
(2) However, if the former resident engages a real estate agent to sell the right to reside, the former resident must
pay the real estate agent’s costs of the sale, if any, and commission.
(3) Except as provided by subsections (1) and (2), a scheme operator must not charge a former resident a fee, charge or
commission, however described, for selling the resident’s right to reside in the resident’s accommodation unit.
Maximum penalty - 40 penalty units.
(4) However, subsection (3) does not apply to an operator under an existing residence contract.
(5) In this section - "ingoing contribution" means the ingoing contribution before any deductions
are made.
S.68
Our observations under S. 58 in relation to in-going contribution apply equally to this Section. We observe with regret but not surprise that you are allowing scheme operators still to make “a fee, charge or commission” in respect of the
termination of ‘existing contracts’. We can tell you for certain that some scheme operators are charging post 1 July 2000 residents a commission on sale if they can get away with it. When a departing resident tells this Association we advise
contesting it and even represent the resident. The scheme operator knows it is illegal and concedes at mediation or before. We also know for a certainty that the Hibiscus group of villages is also making such ‘however described’ charges -
described as termination fee in addition to the exit fee.
Of course, you will say that this is not a matter of the legislation but of compliance and we do not disagree. We make the point that legislation is useless unless compliance is enforced and observe that as far as we are aware the Department has
yet to enforce any compliance.
70A
Valuer’s independence. ‘In a valuation given under this division, a valuer must state any connection to, or agreement with, the scheme operator that may call into question the independence of the valuation.
S.70 A
Who is going to inform the valuer? Who will ensure that there is no such connection or agreement. Why the qualification ‘that may call into question….’ this makes it subjective so who is going to decide? But it is a pointless exercise. Thoroughly
independent the surveyor may be but he is still going to be commissioned and briefed by the scheme operator. The scheme operator will still be telling him what is capital replacement, what is maintenance reserve and what is the residents’
responsibility and therefore to be disregarded. The whole point of the criticism of quantity surveys has been completely missed by the Department.
70B Spouse’s or relative’s right to reside after death or vacation
(1) If -
(a) a resident’s right to reside under a residence contract or an existing residence contract is terminated under this Act; and
(b) the spouse or a relative of the resident, although not a party to the residence contract, was living in the unit when the resident died or vacated the unit; and
(c) the spouse or relative has lived in the unit for at least the 6 months immediately before the resident died or vacated the unit; and
(d) the spouse or relative agrees, in writing, to be bound by the terms
of the resident’s residence contract while the spouse or relative continues to live in the unit; the spouse or relative has a right to reside in the unit for 3 months after the
termination date.
(2) During those 3 months, the spouse or relative has all the rights and liabilities of a resident under this Act.
(3) If -
(a) the resident’s interest in the unit was a leasehold interest or licence; and
(b) no other person has a right under the resident’s residence contract to reside in the unit; and
(c) the spouse or relative meets the eligibility criteria for a resident of the retirement village; and
(d) the spouse or relative, at least 14 days before the end of the 3 months, advises the scheme operator that the spouse or relative wants to enter into a residence contract for the unit; the scheme
operator must enter into a residence contract for the unit with the spouse or relative, on the usual terms, before the end of the 3 months.
(4)This section applies despite the fact that, under Section 55 the resident's right to reside in the unit terminates on the resident's death.
S.70B
This issue is so peripheral but we have no objection in principle. But under sub-section (3), what are the usual terms? What does the Department have in mind? The terms will be whatever the scheme operator decides.
Why not stipulate “on the same terms as those governing the residency of the person whom the spouse or relative is succeeding”; this would have some point. Maybe this is what the Department has in mind but if so it has been badly drafted. One
would expect, of course, strong owner stakeholder objection to that but, as it is of such very limited significance, perhaps they would not; a meagre concession to residents!
79 Facilities information. For this part, the facilities information is as follows -
(a) facilities the scheme operator undertakes to offer a prospective resident under a residence contract for the retirement village;
(b) the facilities the scheme operator proposes offering a prospective resident under a residence contract for the retirement village, depending on sales activity, finance availability or market conditions for the retirement village (each a
“contingency”) and when they are proposed to be offered;
(c) the particular contingency for offering particular facilities mentioned in paragraph (b).
(d) when the scheme operator proposes to start levying a charge for the particular facilities mentioned in paragraph (b).
Example for paragraph (d) -
The scheme operator proposes to start levying a charge for the particular facility when the facility is in place.
S.79 (d)
We insist that what is quoted as an example must be mandatory! In no circumstances should a scheme operator be allowed to start levying a charge before the facility is in place. What happened to the Department’s earlier proposal, leaked during
the last State election? We shall keep you to it:
* It will be clarified that where residents approve a new service, liability for the corresponding GSC only commences when the residents begin receiving that service.
This is reiterated in the summary of key features sent by the Minister very recently to many people.
We are, of course, implacably opposed to any notion of any other than the scheme operator paying for new facilities. Given the opportunity, on
which the Department seems bent, the scheme operator will call a meeting and persuade residents that “although you really want this, we simply don’t have the money to provide it. However, if you agree to pay for it you can have it”.
Thus the scheme operator acquires and retains another depreciable capital asset at no cost.
90 Responsibility for capital improvement
(1) A scheme operator is solely responsible for the cost of the retirement village’s capital improvement, including the capital improvement of the village’s communal facilities owned by the operator.
(2) A resident may give the scheme operator a written request to get quotes for a particular capital improvement to the resident’s accommodation unit.
(3) The resident committee may give the scheme operator a written request to get quotes for a particular capital improvement to the retirement village.
(4) If the scheme operator receives a request under subsection (2) or (3), the scheme operator must get at least 2 quotes for carrying out the capital improvement.
(5) However subsection (4) does not apply if, for exceptional reasons, it is not practicable to get more than 1 quote.
(6) Copies of the quotes or, if the quotes are voluminous, summaries of the quotes and advice about where the complete documents may be inspected, must be given promptly to the resident or the residents committee.
(7) Any reasonable cost associated with getting a quote must be paid by the resident or the residents committee.
(8) Subsection (39) applies only if a resident does not have a freehold interest in the resident’s accommodation unit.
(9) If a resident gives the scheme operator a written request for a particular capital improvement to the resident’s accommodation unit and the operator makes or agrees to make the improvement, the resident is solely
responsible for the cost of the capital improvement.
(10) Also, if -
(a) retirement village residents, by special resolution at a residents meeting, vote to give the scheme operator a written request for another type of capital improvement to the village; and
(b) the operator makes or agrees to make the improvement, all the village residents when the vote was taken are jointly and severally responsible for the cost of the capital improvement.
(11) As a condition of agreeing to make a capital improvement, the operator may require the resident or residents to pay the cost of the improvement before it is made.
(12) The scheme operator must keep the money received for the cost of the capital improvement in a trust account on trust for the benefit of the resident or residents. Maximum penalty - 540 penalty units.
(13) The scheme operator must not use an amount standing to the credit of the trust account for a purpose other than the cost of the capital improvement. Maximum penalty -540 penalty units.
(14) The scheme operator must refund any amount received that exceeds the cost of the capital improvement to the resident or residents.
(15) If a former resident of an accommodation unit stops being liable, under section 104, to pay a proportion of the general services charges, the former resident stops being responsible, under
subsection (9) or (10), for the cost of the capital improvement.
S.90
(Sub-section (3) No, the residents’ committee is not to be given that authority. The residents’ committee can have no authority save that delegated to it by the body which elected it (Joske). For the same reason other
sub-sections must exclude reference to the residents’ committee. Subsection (10 )(a) has it right in that regard. Why in sub-section (9) are you making it mandatory for the resident to pay? What if the scheme operator is inclined to pay, as he
may be (possible if unlikely) before the Unit is completely built? This sub-section makes it unlawful for the scheme operator to do so.
The whole of this proposed amendment is about circumstances which rarely arise. It is a possible avenue for the scheme operator who wishes to make a
capital improvement to do so by getting a malleable residents’ committee to ask for it; it serves no other purpose, that is why it has been put forward by scheme operators. This is another example of the Department trying give residents’
committees an authority to do or agree to things without reference to the body of village residents. As we have said in earlier submissions, we oppose legislating to allow the cost of capital improvement or new services to be other than the
scheme operator’s responsibility
Residents who would like their Unit ‘improved’ will ask the scheme operator who will agree or not. He may well agree so long as the resident agrees to
pay. This is a simple transaction and requires no legislation. Any other improvement for which residents as a whole ask is to be agreed by special resolution of residents, (as at sub-section (10), not by agreement of the residents’ committee.
Residents’ committees are too often easily persuaded to do the scheme operator’s bidding and scheme operators know that. As we have said before, it is doubtful if a vote by residents, however substantial, to have an improvement could bind other
residents whose contracts did not so provide. A contract cannot be varied by the vote of others.
92 Amount of capital replacement fund
(1) Before a scheme operator decides a budget under section 93, the The scheme operator must obtain an independent quantity surveyor’s written report about the expected capital replacement costs for
the village for the next 10 years. Maximum penalty - 540 penalty units.
2) The scheme operator must obtain -
(a) a full report-
(i) in 2004 and in every 3rd year after that; and
(ii) in any year in which substantial changes have been made to
the retirement village; and
(b) an updated report in every year in which a full report need not be obtained
(3) However, the scheme operator need not obtain a full report under subsection (2)(a)(i) in any year in which a full report is obtained under subsection (2)(a)(ii).
(4) The scheme operator must decide the amount to be held in the capital replacement fund for the village (the "capital replacement reserve") having regard to the fund's purpose, the quantity surveyor's report and any amounts transferred to the fund under
section 232 or 234.
(5) In having regard to the quantity surveyor's report the scheme operator must use the operator's best endeavours to implement the surveyor's report in the context of:
(a) objects of the Act;
(b) any circumstances relevant to the retirement village that apparently were not considered by the quantity surveyor.
S. 92 (5)
How does one ensure best endeavours by the scheme operator? What an empty caution this is. The only Objects of the Act dear to the hearts of scheme operators are Section (3) (d) and (f) and the residents' obligations part of 3(a).
See Tribunal case Residents v North Coast Building Pty. Ltd. for an example of things not considered by the quantity surveyor, both from ignorance and from information given by the scheme operator being misleading.
S.93 (3)The Residents' committee may, by written notice given to the scheme operator, ask the scheme operator.....
S. 93(3) Why on earth are you trying to involve residents? The scheme operator is solely responsible for Capital Replacement. It is proper that the
legislation should require certain things regarding a capital replacement fund but do not, pray, require residents to police it. It is of no concern to residents and it is absurdly pointless and wrong for legislation to try to make residents
involved in it. Residents do not care how the scheme operator finances replacement so long as he is solely responsible for it. That is what the Act should and, at present, does require and it is that with which the Department should enforce
compliance.
96 Resident liable for replacing certain capital items
(1) This section applies if a capital item of a retirement village is -
(a) deliberately damaged by a resident; or
(b) subjected to accelerated wear that happened more speedily than would have otherwise been the case caused by a resident's actions.
(2) The resident is liable for the cost of replacing the item.
S.96(b)
Why can you not say damage or deterioration that is beyond 'fair wear and tear'? Fair wear and tear is an expression used in the Residential Tenancies Act and has a meaning which is familiar to the Courts. You must grasp that scheme operators
are simply trying to make residents pay for everything, including fair wear and tear . Look at the PID for Noosa Waters, for example.
98 Amount of maintenance reserve fund
(1) Before the scheme operator decides a budget under section 99, the scheme operator must obtain an independent quantity surveyor’s written report about the expected maintenance and repair costs for
the village for the next 10 years. Maximum penalty - 540 penalty units.
(2) The scheme operator must obtain -
(a) a full report -
(i) in 2004 and in every 3rd year after that; and
(ii) in any year in which substantial changes have been made to the retirement village; and
(b) an updated report in every year in which a full report need not be obtained.
(3) However, the scheme operator need not obtain a full report under subsection (2)(a)(i) in any year in which a full report is obtained under subsection (2)(a)(ii).
(24) The scheme operator must decide the amount to be held in the maintenance reserve fund for the village (the "maintenance reserve") having regard to the fund’s purpose, the quantity surveyor’s report and any amounts transferred to the fund under sections 232 to 234.23
(5) In having regard to the quantity surveyor’s report, the scheme operator must use his or her best endeavours to implement the surveyor’s recommendations in the context of -
(a) the objects of the Act; and
(b) any circumstances relevant to the retirement village that apparently were not considered by the quantity surveyor.
(36) If the amount held in an existing retirement village’s maintenance reserve fund is less than the maintenance reserve, the operator must increase the maintenance reserve fund contribution to reach
the maintenance reserve within the following period after the commencement of this division -
(a) if the first resident in the village occupied an accommodation unit 5 or more years before the commencement - 10 years;
(b) if the first resident in the village occupied an accommodation unit less than 5 years before the commencement -5 years.
(47) If the amount a scheme operator must spend on maintenance or repairs at any time is more than the amount held in the maintenance reserve fund, the operator must pay the difference between the actual amount to be spent
and the amount held in the maintenance reserve fund.
(58) An amount paid under subsection (4) (7) is to be treated as an interest free loan from the scheme operator to the maintenance reserve fund.
(69) The scheme operator may adjust the maintenance reserve fund contribution annually to ensure the maintenance reserve is reached within the relevant period mentioned in subsection (3)
(6).
23 Section 232 (Apportionment of balance where separate funds maintained), section 233 (Apportionment of balance where single fund maintained for maintenance and repairs) and section 234 (Apportionment of balance where single fund maintained for capital replacement and
maintenance and repairs)
S.98
Why, in S.98(2) are you specifying 2004? That has already passed and there may have been a full report in 2003! Every third year should suffice though we consider this to be too short a period. What is likely to change
significantly within even five years? Nothing except perhaps expansion of the village; that is a deliberate act by the scheme operator.
S.98(2)(ii)
No. If a scheme operator decides to extend the village, why should the residents of the existing part be required to pay for the survey occasioned solely by the scheme operator’s decision to expand? These are
establishment costs, to be borne by the scheme operator.
Sub-section (4), it is the scheme operator who will decide. He will have regard or not have regard to whatever he chooses.
Sub-section (5) Pious hopes -
(5)(b) The scheme operator might choose not to inform the quantity surveyor of something. Subsections (4)(6) and (9) (like (2)(3) and (6) of the present unamended Act give the scheme operator untrammelled discretion to vary the MRF contribution
(paid by residents that is) at will. We have long since drawn attention to the unreliability of quantity surveys because of the scheme operators’ influence and control which mean that the surveys can be far from independent. The Department should
scrutinise the findings of the Commercial & Consumer Tribunal in the Buderim Gardens case.
The Department seems anxious to give carte blanche to the scheme operators! Given that, it is most unlikely that proposed sub-section (7) will ever be invoked. A further point on the subject of MRF, one which we have made before: because of the
degree of control which the scheme operator has, it should be removed from Section 107 and put under S.106 and thereby be subject to the limitations of that Section.
What happened to the suggestion in earlier issues papers that MRF contributions should be capped? You have simply dropped it at the scheme operators’
behest without any further consultation with this Association
99 Maintenance reserve fund budget
(1) The scheme operator must adopt a budget for each financial year for the maintenance reserve fund budget.
(2) The maintenance reserve fund budget must—
(a) allow for raising a reasonable amount for maintenance and repairs to -
(i) provide for necessary and reasonable spending from the maintenance reserve fund for the financial year; and
(ii) reserve an appropriate proportional share of amounts necessary to be accumulated to meet anticipated major expenditure over at least the next 9 years after the financial year; and
(b) fix the amount to be raised by way of contribution to cover the estimated recurrent expenditure mentioned in paragraph (a).
Example -
Painting of village property is anticipated to be necessary in 3 years time at a cost currently estimated at $3 000. The contribution amount for the maintenance reserve fund in the budget for the financial year must therefore include the annual proportional share for
painting of $1 000. Next year, the estimated cost has increased to $3 400 and so the second year levy will be $1 200. The estimated cost in the third year is $3 500, so with the $2 200 accumulated, a levy of $1 300 is necessary to meet the cost.
(3)The residents committee may, by written notice given to the scheme operator, ask the scheme operator -
(a) to give the residents committee a copy of the draft budget for the financial year at least 14 days before the beginning of the financial year to which the draft budget relates; and
(b) to attend a meeting of the residents committee that is to be held before the start of the financial year to which the draft budget relates to discuss the draft budget.
(4)The notice must be given at least 28 days before the beginning of the financial year to which the draft budget relates.
(5)The scheme operator must comply with the notice.
(6)If, at the end of a financial year for which a budget is adopted, there is a surplus or deficit, the surplus or deficit must be carried forward and taken into account in adopting the budget for the next financial year.
S.99
What is proposed here shows a misunderstanding of the way the Maintenance Reserve Fund is supposed to work. The first quantity survey was supposed to estimate what was likely to be needed to be spent over the ensuing ten
years. It will necessarily be higher in some years than in others, depending on what is done in which years. The contributions are supposed to be pitched so that they will be the same each year (other things being equal) cutting a horizontal
line between the highs and lows but equalling estimated expenditure in the long run. There is therefore no need for any separate or distinct budgeting. The expenditure should follow what has been forecast by the surveyor. The remark about
deficits and surpluses is therefore quite superfluous. If there does happen to be a deficit in any particular year it is to be remedied in accordance with new sub-section 8 (old 5)
In this Section and in others, reference is made to the maintenance reserve, to be determined by the scheme operator. What is the ‘maintenance
reserve’? If it has a monetary quantum, how is it calculated? As the Act now is, a scheme operator may pluck a figure out of the air or change it at will. In practice, because of its nebulous meaning, the expression is hardly heeded; the scheme
operator decides from year to year what residents must contribute notwithstanding the quantity survey. Which is a very good reason for putting it under Section 106.
S.103(7)
The scheme operator must not include, or provide for, in the charge for general services an amount or component, however described, that is payable for or towards costs awarded by the tribunal against the operator.
S.103 proposed sub-section (7).
This is not enough. It is not just costs awarded by the Tribunal. It must prohibit any costs at all incurred in respect of a dispute between a resident or residents and the scheme operator, whether or not it is heard by the Tribunal or any other
Court of Law. Bear in mind that if a Court awards costs it will be against the respondent, not against the residents of respondent’s village. To forbid provision for such costs is not enough; charging such costs to residents funds must also be
clearly prohibited. We recommend the reinstatement of Section 200.
We should like to see two further sub-sections:
(8) Scheme operators must not include or provide for in the charge for general services an amount which is for the depreciation of capital items. This applies whether or not the scheme operator claims a depreciation allowance under the Income Tax
Acts.
(9) Scheme operators must not include or provide for in the charge for general services an amount which is for the payment required under the Payroll Tax Act 1971, Community Ambulance Cover Act 2003 or any other amount which is not in respect of a
service to residents.
Residents should not be required to pay a scheme operator’s legal costs however they arise. If a scheme operator incurs costs in getting legal or
other advice on how properly to comply with the law, how properly to run the village, then that is the scheme operator’s (deductible) expense and not to be recovered from residents.
103A General services charges budget
(1) The scheme operator must adopt a budget for each financial year for the general services charges.
(2) The general services charges budget must -
(a) allow for raising a reasonable amount to provide the general services for the financial year; and
(b) fix the amount to be raised by way of contribution to cover the amount.
(3) The residents committee may, by written notice given to the scheme operator, ask the scheme operator -
(a) to give the residents committee a copy of the draft budget for the financial year at least 14 days before the beginning of the financial year; and
(b) to attend a meeting of the residents committee that is to be held before the start of the financial year to which the draft budget relates to discuss the draft budget.
(4) The notice must be given at least 28 days before the beginning of the financial year.
(5)The scheme operator must comply with the notice.
(6)If, at the end of a financial year for which a budget is adopted, there is a surplus or deficit, the surplus or deficit must be carried forward and taken into account in adopting the budget for the next financial year.
S.103A
Whatever is set down under a sub-section on Budgets, there must be a caution: "subject to the provisions of Sections 106 and 107." The proposed sub-sections (3),(4) and (5) are highly suspect because they ignore decisions made by the
Retirement Villages Tribunal and the Commercial and Consumer Tribunal. See Schintler v. Chancellor Park, V 001-01 of Sept. 2001 and Phillips v. Eden Lea, V001-04 of December 2004. If there is to be any proposed increase in residents’ fees, which
this sub-section 103(A) contemplates, the scheme operator must present to residents a paper showing:
(i) the estimated budget for the previous year,
(ii) the actual expenditure for the previous year
(iii) The estimated budget for the year in prospect
Clearly, (ii) cannot be presented before the end of the financial year. That means that General Services charges cannot be increased from the
beginning of the following financial year. Given the need for the accounts to be audited, the meeting to ‘adopt’ the budget is unlikely to take place before two months after the end of a financial year. Given also a (customary) need for a month’s
notice of any increase, (no retrospection!) it is unlikely that an increase can be implemented before three months after. But there is no compulsion whatever to make increases coincide with the beginning of a financial year.
Sub-section (6) As we have said before, we are totally opposed to deficits being carried forward. This proposed amendment will just encourage scheme
operators not to concern themselves very much about overspendings because they can just recover them the following year. They will not be concerned to keep an increase within the CPI limitation, even with a S.106 veto by residents; they will just
spend and subsequently recover the deficit. They will argue, as has been done, "we have spent it so you have to pay."
We might relent on our opposition to carrying forward deficits only if you change proposed S.103 to read: "The scheme operator and residents must
adopt….." - giving residents equal say and with no relaxation of the need for a special resolution of residents to exceed the CPI increase.
S.104(3)
Any liability of a former resident to pay a proportion of the general services charges, either under subsection (2) or under the terms of an existing residence contract, ends when the first of the following happens -
(a) the right to reside in the unit is sold;
(b) a period of 1 year after the resident vacates the unit elapses.
S.104
Again you have simply capitulated to the scheme operators without any consultation with us. Again you have reneged on something in an earlier issues paper in which you canvassed that it would be 9 months.
Now it is back to a year. We do not depart from our oft stated view that it should be no more than six months, as is the case with Church and some other villages which together are the majority of villages.
106 Increasing general services charges
(1) A scheme operator may increase charges for general services for a retirement village only under this section or as allowed under section 107.
(2) The scheme operator must not increase the charge for a particular general service except to offset an increase in the cost of supplying that particular general service.
(3) The increase must not be greater than the CPI percentage increase unless the retirement village residents, by special resolution at a residents meeting, approve otherwise.
Maximum penalty - 200 penalty units.
(4) If the residents approve the increase for a particular general service, the total general services charge may be increased only by the amount of the approved increase of the particular general service.
Example for subsections (2) to (4) -
The cost of supplying each of the general services for a retirement village has increased, except for the cleaning costs. The CPI percentage increase is 1%. The residents, by special resolution at a residents meeting,
approve an increase of the charge for electricity by 2%. After the residents meeting, the scheme operator may increase the charge for electricity by the agreed 2%. The scheme operator can not increase the charge for cleaning, but may increase the charge for the
remaining general services by the CPI percentage increase of 1%.
(5) The increase may only take effect prospectively, unless the residents, by special resolution at the residents meeting, approve otherwise. (56)
In this section -
CPI means the all groups consumer price index for Brisbane published by the Australian statistician.
CPI percentage increase, for a particular year, means the percentage increase between -
(a) the CPI published for the quarter ending immediately before the start of that year; and
(b) the CPI published for the quarter ending immediately before the end of that year.
S.106
The Act should not, at subsection (4) refer to the ‘total general services charge’ but to the total of general services charges. See Phillips v Edenlea. (V001-04)
S.106(4)
On a strict reading of it there is nothing to object to in the example. However, this is going to encourage some scheme operators to make increases by the CPI increase perfunctory, because that is how the example will be seen. As there is
really no need to exemplify how the Section works, we are inclined to see the insertion of the example as deliberate encouragement of perfunctory CPI increases. At the very least it will result in further applications by residents to the
Tribunal. We should be prepared to consider such perfunctory increase only, but only, if no other increase were to be allowed.
S.106(5)
We applaud the limitation of increases to prospective but would prefer to have no loophole for retrospection. Scheme operators have shown their opposition to retrospective increases yet here they want the ability to make something retrospective.
Residents will not want retrospective increases any way; the only purpose of ‘unless residents agree’ is to allow scheme operators the opportunity to persuade residents to agree. That opportunity should be denied.
S.107
We should like to see the following added at sub-section (b)(iii):
"Evidence of the currency of which is produced to residents. Without such evidence salaries and wages are to be treated as S.106 items of
expenditure”
The Industrial Relations Act requires the terms of awards or agreements to be displayed at the workplace; there is no good reason why they should not also be displayed
for the purpose of residents’ scrutiny. The reason for the addition we have proposed is that scheme operators automatically include salaries and wages under S.107 whether or not there is a current award or agreement. This is unlawful but they do
so and thereby increase salaries and wages at will. If there is no such current award or agreement, salaries and wages must be shown under S.106 and be subject to the restrictions imposed by that Section.
There is a further point to all that. If salaries and wages are to be the subject of an award, there really needs to be an award specific to all retirement villages.
Perhaps the Department should sponsor one. Although retirement villages were not included under it, some scheme operators are purportedly using, by analogy, the terms of the Aged Care Award which covers staff in Aged Care Establishments, which
includes both ‘lower’ and ‘higher’ care. This is inappropriate for retirement villages, where such care is not administered.
S.107 - MRF (exclusion)
Scheme operators already have unrestricted ability to increase MRF contributions and the proposed amendments simply strengthen that. It is therefore inappropriate to include them under S.107, which relates to items over which the scheme
operator purportedly has no control. MRF should be included in S.106, where the scheme operator will have to justify increases in contributions.
108 New services to be approved by majority of residents
(1) A scheme operator may offer residents a service not already supplied under the scheme, for which a services charge is to be, or may be, made, only if the residents agree to it being supplied by
special resolution at a residents meeting
(2) Subsection (1) does not apply to -
(a) a personal service; or
(b) another service, if the public information document given to each of the residents stated that the service was proposed to be supplied.
(3)The scheme operator must give the residents copies of at least 2 quotes for supplying the service.
(4)However, subsection (3) does not apply if, for exceptional reasons, it is not practicable to get more than 1 quote.
(5)Copies of the quotes or, if voluminous, summaries of the quotes and advice about where the complete documents may be inspected, must accompany the notice of the residents meeting.
(6) Any cost associated with getting a quote must be paid by the residents.
(7)If any capital improvements are required in order for the scheme operator to supply the service, the scheme operator may call for a vote under section 90(4)24
at the residents meeting.
(8)The operator may not charge the residents for the new service before the service is supplied to the residents.
S.108
We are talking here about the scheme operator proposing to institute a new service but you are proposing that the residents should pay for any quotes that the operator obtains. Absolutely preposterous. If the scheme
operator proposes a new service it is up to him to tell residents how much it will cost before asking them to vote on whether they want it. What quotes he gets is up to him, no cost whatever to residents. Subsections (3)(4)(5)and(6) should be
scrapped.
S.110(3)
The insurance may be taken out subject to an excess.
(4) However, the excess must not be more than the maximum excess prescribed under a regulation, unless the residents, by special resolution at a residents meeting, agree otherwise.
(5) Although, the residents must not agree to the excess being more than 2.5% of the insured value of the retirement village.
S.110
The reason scheme operators want this is so that they can make residents pay, preferably personally, for any amount which, in the event of a claim, the insurers are not required to pay under the excess clause. If
residents are to decide on it from village to village there will be little uniformity among villages, which is what scheme operators prefer - divide and rule. Scheme operators will persuade residents to have a substantial excess by pointing to
the savings to their General Services Fund. They will undoubtedly downplay the consequences of a significant claim. A 2.5% excess on a $500,000 public liability claim would, if scheme operators get their way, which you seem determined to allow,
leave residents to find $12,500. Forrester Kurts, leading the charge on this excess business, have, in one of their villages at least, a $25,000 excess on buildings and $10,000 on public liability. What if an insurable event causes that much or
more damage? Who pays? How? We are adamantly opposed to this proposal unless such short payments by the insurer are met entirely by the scheme operator and not passed on to residents, either to their general services fund or personally, the
latter of which Forrester Kurts are already trying. If scheme operators want an excess clause let them fund any shortfall on a claim. Residents want certainty; they do not want the possibility of suddenly being faced with a huge impost. We
should be prepared to consider a very small excess which did nothing more than prevent minor vexatious claims. However, since it is the scheme operator who makes claims against the insurance, he should not make minor or vexatious claims.
S.112(4) should read the same as S.112(1) "At the request of a resident". not "at the request of the residents’ committee”.
113A Classification of expenditure
(1) The chief executive may issue guidelines that classify whether a particular item of expenditure must be -
(2) The guidelines apply to a retirement village unless the scheme operator gives -
(a) the chief executive written notice of the operator’s classification system; and
(b) the residents written notice of the operator’s classification system by—
(i) giving the notice to the residents committee; or
(ii) if there is no residents committee, putting the notice in a place in the retirement village where it is likely to be seen by most of the residents of the village.
(3) If there is a dispute between a resident and a scheme operator about how the scheme operator has classified an item of expenditure, the dispute is a retirement village
dispute.
(4) In this section -
“operator’s classification system” means the way in which the operator classifies each item of expenditure.
S.113A
Such guidelines as to classification of expenditure have not been discussed with the ARQRV. Why not? Why do you propose that the Department issue guidelines (presumably by regulation) but allow scheme operators to opt out
and decide their own classification. It is quite absurd to have other than a uniform set of mandatory classifications. As we have said in the past about ACQ’s proposals on classification, we do not simply accept scheme operators’ classifications.
Neither should the Department.
The proposed S.113A(4) allows that there can be a retirement village dispute over classification. But if you remove the Act’s dependence on the Tax
Rulings, as you propose, what can be the basis of the dispute? To what would residents be able to refer as a yardstick if scheme operators are allowed to prescribe their own classification?
127 Residents committee
(1) The residents of a retirement village may establish, by election conducted among themselves, a residents committee.
(2) A member of the residents committee -
(a) holds office for not more than 1 year, but may be re-elected; and
(b) may be removed, at any time, by special resolution at a meeting of the village residents.
(3) The residents committee may, subject to section 128 -
(a) decide its own procedures; and
(b) form subcommittees and decide a subcommittee’s procedures.
(4) The scheme operator for the retirement village may address the residents at a residents committee meeting.
(4) The scheme operator may attend a residents committee meeting to address the residents at the meeting.
(5) A majority of residents at the meeting may, by resolution, require the scheme operator to leave the meeting after the scheme operator has addressed the
meeting or been given a reasonable opportunity to address the meeting.
S127
What is the difference between the proposed sub-section (4) and the existing one? You have failed to heed what we have said before; at subsections (4) and (5) you are confusing meetings of residents with meetings of residents’ committees. We
continue to oppose the scheme operator being given a right to attend meetings of residents or their committees; it must be by invitation of residents. It is not enough for residents to be able to require scheme operators or their managers to leave
the meeting. Can you really see a meeting of mostly ladies in their eighties proposing and voting, under the beady eyes of the scheme operator or his village manager, to exclude the latter from the meeting? Retribution and reprisal are not
figments of anyone’s imagination, they are real resident fears. However much we tell residents that they cannot just be evicted, those apprehensions remain; the Department proposes to exacerbate them.
Only rarely are residents’ meetings attended by more than about a third of residents. If the scheme operator wishes to inform residents of anything,
by far the best way is by a circular to all residents. If he wishes residents to discuss, especially to vote, he must go through the proper process in relation to special resolutions. Otherwise, residents meetings are private to them; they are
not to be required to account to the scheme operator or his manager.
The argument that it is the scheme operator’s village and he can require what he likes is the most retrogressive, undemocratic and dictatorial
attitude one can imagine but it is what the Department seems to be espousing. For the privilege of living in the village, residents pay most handsomely. The Department is nevertheless supporting the notion that residents are to be completely
subservient to the whims and wishes of the village managers. Their lives in the village are to be regulated by a village manager. Retirement villages are not prison camps but the Department is helping steer them in that direction.
129 Committee’s function
The function of the residents committee is to deal with the scheme operator on behalf of residents about the day to day running of the village and any complaints or proposals raised by the residents.
S.129
It can be a function but not the function. Residents at their meetings and a residents’ committee may deal with all sorts of matters which are not to do with the day to day running of the village
132A Minutes of meetings
(1) The residents committee must ensure full and accurate minutes are taken of each residents meeting.
(2) The minutes must include at least the following particulars -
(a) the date, time and place of the meeting;
(b) the names of persons present and details of the capacity in which they attended the meeting;
(c) details of proxies tabled;
(d) the words of each question decided;
(e) the number of votes for and against each question decided;
(f) details of correspondence, reports, notices or other documents tabled.
(3) The minutes must be presented at the next meeting for confirmation, and if confirmed, a member of the residents committee must sign the minutes as accurate.
(4) At the request of the scheme operator, the residents committee must give the scheme operator access to, or a copy of, the minutes of a meeting.
(5) For that purpose, the residents committee may obliterate parts of a copy of the minutes to ensure the scheme operator does not have access to
information relating to a proposed or on-going retirement village dispute.
S.132A
The whole of this is nothing short of outrageous. Will you please stop playing Big Brother! Stop trying to tell residents what sort of meetings they may have and what they must do at them. The Department should have no
say at all in such matters, any more than they do in relation to meetings of any unincorporated Association. Again, you are simply echoing what scheme operators want, and what they want is complete control of the activities of residents. Try as
they do, they have not been able to achieve that so they want Government to achieve it for them. And Department of Fair Trading seems more than willing.
What you are proposing will ensure that there will be no residents’ committees or residents’ meetings worthy of the name and that is exactly what scheme
operators would like - complete control without dissent. A puppet committee that will agree with management on everything. Residents’ committees must rely for their authority on the residents body as a whole. Departments must butt out and not try
to usurp residents authority over their committees.
133 Voting
(1) The following persons are entitled to vote at a meeting of the residents of a retirement village -
(a) 1 resident of each accommodation unit in the retirement village;
(b) while a former resident of an accommodation unit is required under section 10426 to pay the whole or a proportion of the
general services charges—1 former resident of the accommodation unit.’.
(2) The resident’s vote may be cast by -
(a) the resident; or
(b) a person who the resident has appointed by power of attorney; or
(c) a resident of the village who the resident has appointed by signed notice to vote at a particular meeting stated in the notice.
(3) A signed notice under subsection (2)(c) must not relate to more than 1 meeting.
(34) A resident of a retirement village may cast a vote (“postal vote”) for a residents meeting by placing the resident’s written
vote in a container provided by the scheme operator for the purpose in the common area of the village at least 24 hours before the time when the meeting is to be held.
(45) The scheme operator must provide a secure locked container for postal votes in the common area at least 24 hours before the time the meeting is to be held. Maximum penalty - 10 penalty units.
(56) The scheme operator must not open, or allow to be opened, the container before it is delivered to the chairperson of the meeting. Maximum penalty - 10 penalty units.
(67) The scheme operator must deliver the container to the chairperson of the meeting immediately before the chairperson opens the meeting. Maximum penalty for subsection (6) - 10 penalty units.
S.133
On what authority and for what reasons do you propose to refute universal suffrage and change the present one resident one vote to one vote per set of bricks and mortar?
It is more than a hundred years since voting was only for property owners. How would you propose that one vote per Unit be allocated between a couple?
And how would you avoid a charge of discrimination? Yet again you play into the hands of scheme operators because they are less able to manipulate or intimidate couples, who are likely to be younger than elderly ladies on their own. It is other
residents and this Association that protects the interests of elderly single occupants, not scheme operators, and obviously not the Department of Fair Trading.
The Department has sought an analogue in the provisions of the Body Corporate & Community Management Act. This is a completely false trail. Nowhere in
that Act or its various modules (Regulations) are retirement villages mentioned. That Act was never meant to encompass retirement villages but was meant for all sorts of strata title developments where there can be very considerable differences
in the value of strata title apartments; entirely inappropriate to retirement villages. Interested parties, including the Department of Fair Trading, have been examining how to frame a specific module for freehold villages. We have all given up
because it is fraught with difficulty. That is an admission that freehold villages are ill served by the BC&CM Act but the Department nevertheless proposes to borrow from that Act in relation to voting in leasehold/licence retirement villages,
just because that is what retirement village operators want.
If the Department persists with this amendment it will have to redefine the whole concept of “who is a resident” because residents may vote by
presence, postal vote, proxy, power of attorney. There will also be many other Sections of the Act which will need rewording. Scheme operators have got the Department on a bucking bronco here.
174 Who may represent a resident before the tribunal 'A resident who is an
individual may be represented before the tribunal by another resident who is not a lawyer.'
S.174
You are trying to move the goal posts. Because the ARQRV President presented a case in relation to Ss. 106 and 107 which the Tribunal accepted and rejected that submitted by Minter Ellison for scheme operators, the
operators want him silenced. And they propose to do that by sabotaging the Commercial & Consumer Tribunal’s provisions. Not by changing that Act but by persuading the Department to create a back door in the Retirement Villages Act. The Commercial
& Consumer Act allows that an individual (or group) may be represented by another person who is not a lawyer. The Department is deliberately trying to weaken that by specifying that a village resident can only be represented by another
resident of that village. How completely suborned to the interests of the big end of town the Department is.
S.191(4)
This section applies if a resident applies for a tribunal order under section 169,170 or 171.
S.191
Section 191 refers to ‘Tribunal orders generally“. Why, at the proposed sub-section (4), are you attempting to circumscribe them?
Dictionary :
Capital Items
This proposed amendment is the most outrageous of all. You are aiding and abetting scheme operators to set at naught the provisions of the Sections relating to the Maintenance Reserve Fund and the Capital Replacement
Fund. Those funds would very nearly become defunct as scheme operators will ensure, as they are already attempting to do, that the resident pays for everything in respect of the accommodation Unit; the proposed amendment will simply legitimise that. Nothing will be
charged to either the capital replacement fund or the maintenance reserve fund.
This is the most comprehensive sell-out by the Department imaginable.
Capital Improvement
This includes more than first time provision of a capital item. Under the tax rulings it also includes initial repairs and restorations undertaken when a village is purchased from a previous owner. It also includes
replacement of an item by a plainly and unnecessarily superior item.
Day to Day Maintenance
How does one interpret “regularly” or of “little expense”.
Tax Rulings generally
This Association has never been opposed to the use of the Tax Rulings but has in the past been sceptical of reliance on them because they are concerned with tax deductibility and we are concerned with who pays for what.
In the light of experience, however, we have moderated our view on that score. Unless the Department is prepared to spell out what improvement, replacement and repair mean, as comprehensively as do those rulings and, additionally, specify who pays for what, then we
prefer to stay with the Tax Rulings. They have already been referred to in Tribunal hearings, they are more or less immutable and there is a good deal of precedent and law to depend on. If they are discarded, as you propose, classification will become a free for all
for scheme operators with no redress for residents.
Scheme operators would prefer to drop the Tax Rulings yardstick because they fear that they will provide arguments for residents, which they can do and have done, and not
support what scheme operators want to impose.
We seem quite unable to get the Department to understand that a leasehold/licence village is entirely the property of the scheme operator. It is his income producing property
and, like any landlord, should really be responsible for its protection, by repairs, maintenance, replacement, improvement and insurance. Even where, as with almost everything, the cost is passed on to residents, the scheme operator claims the costs against his tax
liability in one way or another. It can very well be argued that these allowances and deductions should be passed on to residents if they are paying the costs. This is a matter which warrants discussion but there has been none. The Scheme operators certainly do not
want these issues investigated. Is the Department prepared to pursue this aspect of what residents pay for?
General observations
It is abundantly clear that nobody in the Department of Fair Trading has the slightest idea of what living in a retirement village can entail; the problems, the intimidatory tactics, the lack of transparency in
dealings with residents, to the last of which the Disputes Tribunals have frequently drawn attention. It is also clear that the Department is heavily biased toward the interests of scheme operators, as presented by them, their lobbyists and lawyers. It is also a fact
that there have been very few discussions between the ARQRV and the Department of Fair Trading in the three and a half years that the review of the Act has been going on.
By and large, these proposed amendments represent a comprehensive sell-out by the Department to scheme operators. The interests of residents, but for a few relatively minor
and reducing concessions that should have been made when the Act was passed, have been almost completely passed over. Anything in the Act that has been found to give residents an opening to achieve equity has been altered to block that opening.
Phil Phillips.
President, ARQRV
28th March 2005. |
