Retirement villages case studies

Case study 1

Section 152 of the Retirement Villages Act 1999 contains very specific conditions under which a resident’s liability to pay recurrent charges in respect of general services can cease.

After moving from a retirement village into a nursing home, a former occupant had been paying the general service charges on the retirement village unit which had still not sold.  He applied to the CTTT for a refund of the general service charges based on the final wording of section 152 which ways a resident is liable “… unless the contract between the former occupant and the operator provides for an earlier cessation of that liability”.

At the hearing, the village operator claimed that under the residence contract, there was a provision which say that the resident was liable to continue paying the recurrent general charges after permanently vacating the premises until six months after the resident 'delivered up vacant possession of the residential premises'.  A representative for the elderly man argued that when he permanently moved fro the retirement village to a nursing home, this equated to the resident giving 'vacant possession'.

The Tribunal Member stated that the Retirement Villages Act 1999 clearly distinguishes between vacant possession and having permanently vacated the premises, and makes it clear that a person can permanently vacate the premises and not grant vacant possession. 
The Tribunal Member found that the elderly man still retained ownership and had not granted vacant possession.  Therefore the application was dismissed and recurrent charges for general services should continue until the unit was sold.

Case study 2

A variation of the recurrent charge amount may only be made in accordance with the provisions of the Retirement Villages Act 1999.  Residents of the retirement village may apply to the CTTT to claim a refund if they can show an overpayment of recurrent charges.

A retirement village was experiencing an increase vacancy rate and a decline in business.  As a result the village operator sought to increase the recurrent charges payable by the residents to account for a shortfall in the village budget.  The operator sent all residents a proposed annual budget which put forward an increase of $10 per fortnight in the recurrent charges.

The residents held a meeting to vote on the proposed increase and it was accepted by a majority, albeit with some protest and disappointment.  Some residents claimed the vacancy rate was the village operator’s responsibility.  They subsequently made an application to the CTTT seeking an order that an overpayment of recurrent charges be refunded on the basis that the operator did not have the authority to amend the recurring payments.

At the CTTT hearing the village operator gave evidence that they had complied with proper procedure for the variation of recurrent charges as set out in the Retirement Villages Act 1999.  The operator stated they had given sufficient notice of the proposed variation to the residents, sent out a proposed annual budget detailing the amount and the reasons for the increase, and had sought and received the residents’ consent to the variation.

The Tribunal Member found that the village operator had complied with the required procedures for variation of the recurrent charges.  Accordingly, orders were made dismissing the residents’ application as they did not show there were any grounds that there had been an overpayment.