MURPHY v OVERTON INVESTMENTS PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, POWELL JJA and FITZGERALD AJA 2 July 1998, 3 September 1998 [1998] NSWCA 149 CODES of practice of retirement village: legal effect of Codes; imposition of restrictions on owner/manager; rights of residents; interaction of Codes with Fair Trading Act 1987; power and jurisdiction of Residential Tenancies Tribunal Priestley JA I agree with Fitzgerald AJA. Powell JA I agree with Fitzgerald AJA. Fitzgerald AJA This expedited appeal from a judgment in the Equity Division relates to part of a dispute between most of the residents of the Heritage Retirement Village at Padstow Heights and the owner and manager of the village, Overton Investments Pty Ltd. The village consists of 124 units, and more than 100 of the residents are appellants. Each of the Director-General of the Department of Fair Trading and the Tenancy Commissioner is a party to this appeal and one or more other proceedings involving the appellant-residents and Overton. The appeal involves a challenge by the appellant-residents to the answers given to two preliminary questions by a Judge in the Equity Division on 23 December 1997. Question 1 The first question, which the Equity Division answered in the negative, asked whether, subject to any injunction pursuant to s66 of the Fair Trading Act 1987, any undertaking pursuant to s76 of that Act, or any order pursuant to s78 of that Act, Overton is precluded from recovering from the appellant-residents " contributions to Outgoings and Outgoings of Apartments for 1993/94 and succeeding years otherwise payable under their respective leases... over and above the items and amounts of the budget approved by the residents of the Village ('the Village Residents') for 1992/93, by virtue of: "(i)(a) any absence of agreement of the Village residents to, or their approval of budgets prepared by Overton (1) for the 1993/1994, 1994/1995 and 1996/1996 financial years and (2) for the 1996/1997 and succeeding financial years. (b) the fact that the 1992/1993 budget was made and agreed to by the residents of the Village prior to the commencement of the 1995 Code of Practice. (c) any differences between items and amounts in the budgets for the 1993/1994 and succeeding financial years and the items and amounts in the 1992/1993 budget. (ii) any breach of Pt5 of the Code of Practice prescribed by the Retirement Villages Industry Code of Practice Regulation 1989 ('the 1989 Code of Practice') or cl40 or cl41 of the Code of Practice prescribed by the Retirement Villages Industry Code of Practice Regulation 1995 ('the 1995 Code of Practice')." The validity of the 1989 and 1995 Codes of Practice is accepted. On 10 December 1997. it was held in the Equity Division that the 1995 Code of Practice is valid. That decision has not been challenged, and in this Court it was at least 2 UNREPORTED JUDGMENTS implicitly accepted that the 1989 Code of Practice was similarly valid. Broadly speaking, the 1995 Code is a modernised version of the 1989 Code, and it is unnecessary to discuss the 1989 Code separately except to acknowledge that a material code of practice has been in operation since the 1989 Code came into effect in that year. Further, the essential facts for present purposes are not in dispute. Each of the village residents occupies his or her unit under a 99 year lease. Each lease is in the form of a schedule to a trust deed between Overton and a trustee company and incorporates by reference the provisions of a memorandum filed in the Land Titles Office. C126 of the standard lease provides: 'The Retirement Villages Act 1989 and the New South Wales Village Industry Code of Practice gives lessees significant rights to have disputes heard by a Dispute Committee with further rights to go to the Appeals Panel established under the said Code of Practice and limited rights to go to the Residential Tenancies Tribunal. The said Code also contains provisions relating to the involvement of residents in management." Subject to the possible operation of one or both Codes of Practice, the leases, including the memorandum, constitute the residence contracts! between the village residents and Overton. Most, if not all, of the leases were entered into after the 1989 Code of Practice came into effect; some while that Code of Practice was in force, and some after the 1989 Code of Practice had been repealed and the 1995 Code of Practice had come into force. Overton is required by the residence contracts to conduct, manage and operate the village "as a first class retirement village", and village residents are required to "... contribute to the Outgoings and Outgoings of Apartments Detailed, although not necessarily exhaustive, provision is made concerning matters in respect of which Overton may levy and require payment of contributions for outgoings from the village residents. The disputes between the appellant-residents and Overton have arisen because Overton has prepared the 1993/1994 and subsequent budgets on a different basis from that previously adopted, resulting in substantially increased charges for outgoings contributions since 1993/1994. For present purposes, it has been assumed by the parties that Overton would be entitled to require the appellant-residents to pay the outgoings contributions which it has levied were it not for the 1989 and 1995 Codes of Practice. It is not in dispute that the 1989 and 1995 Codes of Practice and the Retirement Villages Act apply to the village. SS of that Act provides that it applies to retirement villages to which a code? applies, whether the village was established before or after the commencement of the section. Each code similarly contains a provision that it applies to existing as well as new retirement villages. SS of the Retirement Villages Act also provides that that Act applies despite the terms of a contract. agreement, scheme or arrangement, whether made before or after the commencement of the section. Subs38(1) of that Act provides: "38 Contracting out prohibited (1) Except as provided by subs(2), the provisions of this Act have effect despite any stipulation to the contrary in any contract, agreement, scheme or arrangement, and no residence contract or other contract, agreement scheme or 1. See the definition of "residence contract" in subs(1) of the Retirement Villages Act 1989 and each of the 1989 and 1995 Codes of Practice. 2. See the definition of "code" in subs3(1) of the Retirement Villages Act. URJ MURPHY v OVERTON INVESTMENTS PTY LTD (Fitzgerald AJA) 3 arrangement (whether oral or wholly or partly in writing, and whether made or entered into before or after the commencement of this section) operates to annul, vary or exclude any of the provisions of this Act." There is no suggestion that the residence contracts between the appellant-residents and Overton are in conflict with the Retirement Villages Act. Neither s5 nor subs38(1) of that Act nor any other statutory provision expressly subordinates residence contracts to a code of practice or incorporated the 1989 Code, or incorporates the 1995 Code, into residence contracts. The 1989 Code did not, and the 1995 Code of Practice does not contain a provision similar to either s5 or s38 of the Retirement Villages Act,3 or incorporate that Code into the residence contracts. Similarly, in my opinion, cl26 of the standard lease does not do so. The Codes of Practice were made under subs75(1) of the Fair Trading Act.4 The 1989 Code of Practice was repealed by the 1995 Code of Practice, which commenced on 31 August 1995. Under subs10(2) of the Subordinate Legislation Act 1989, the 1995 Code of Practice will be repealed on 1 September 2000. There was no retirement village code of practice prior to the 1989 Code of Practice, and there might be no retirement village code of practice after the 1995 Code of Practice is repealed. Nonetheless, the 1989 and 1995 Codes of Practice plainly were, and are, intended to have some legal effect. Under s66 of the Fair Trading Act, the Supreme Court may grant an injunction against conduct that constitutes, or would constitute, a contravention of a code of practice, or ancillary conduct. Under s76 of the Act, the Director General of the Department of Consumer Affairs may request a person who appears to have carried on business in contravention of a code of practice to undertake to discontinue the conduct which is in contravention, to rectify the consequences and to comply in future with the code of practice. If the undertaking is not given or an undertaking which has been given is not complied with, an order may be made by the Commercial Tribunal5 under s78 of the Act that action be taken or refrained from and/or that the undertaking be observed. Both s66 and s78 of the Act require that the proceeding be brought by the Director-General of the Department of Fair Trading. Provision is made in s78A of the Act for the Commercial Tribunal to make an order on the application of a "consumer in respect of whom a prescribed code of practice applies" which "relates to a contravention or alleged contravention of the code of practice which has adversely affected the person". On such an application, the Commercial Tribunal may order that the contravention be discontinued and its consequences rectified. However, the Director-General of the Department of Fair Trading or some other "person prescribed as a consent authority for the purpose of applications to the Commercial Tribunal in respect of prescribed codes of practice" must consent to the application.® In addition, subject to significant qualifications, s14 of the Retirement Villages Act authorises the Residential Tenancies Tribunal' to determine certain disputes between residents or between one or more residents and the owner or manager of 3. Detailed reference is later made to provisions of the 1995 Code of Practice, including cl3 and cll3. See also s92 of the Fair Trading Act. Constituted by the Commercial Tribunal Act 1984. The 1995 Code of Practice became a "prescribed code of practice" for the purposes of s78A of the Fair Trading Act on 1 December 1997. 7. Constituted by the Residential Tenancies Act 1987. Dae 4 UNREPORTED JUDGMENTS a retirement village and to make various orders, including an order for the payment of money.8 The Tenancy Commissioner may intervene in such a proceeding. Importantly, s31 of the Retirement Villages Act provides: "31. Limits on orders by Tribunal (1) The Tribunal shall not make orders under this Act that are: (a) inconsistent with any applicable code; or (b) inconsistent with a residence contract (2) Subs(1) does not apply to a provision of a residence contact that contravenes s38. While s42 of the Retirement Villages Act provides that nothing in that Act limits the operation of the Contracts Review Act 1980 and each of the 1989 and 1995 Codes of Practice provides that the latter Act is applicable to residence contracts, it was not suggested in this Court that the Contracts Review Act is material to the disposition of this appeal. The principal provisions of the 1995 Code of Practice for present purposes are as follows: "Ptl - INTRODUCTION AND OBJECTIVES Introduction 1(1) This Code sets out what is considered to be good practice for fair dealing in the promotion, sale and operation of retirement villages. The Code is complementary to the Retirement Villages Act 1989. (3) The code of practice format has been adopted because of its inherent flexibility. Using the broad framework of the Fair Trading Act 1987, this Code allows the Government to introduce obligations that meet the needs of all parties in specific industries while avoiding the complexities and expense of detailed legislation. Definitions 2. In this Code: "management", in relation to a retirement village, means the person by or on whose behalf the retirement village is administered... "residence contract" means a contract, agreement, scheme or arrangement by which a person obtains the right to occupy residential premises in a retirement village, and may take the form of a lease or licence; "resident", in relation to a retirement village, means a person who occupies residential premises in a retirement village under a residence contract, and includes a person who occupies such premises and who is or was the spouse or de-facto partner (within the meaning of the De Facto Relationships Act 1984) of such a person; "residential premises" means any premises or part of premises... used or intended to be used as a place of residence; Code is mandatory 3.(1) This Code is mandatory. 8. See subs14(8) of the Retirement Villages Act. 9. See s98 of the Residential Tenancies Act. URJ MURPHY v OVERTON INVESTMENTS PTY LTD (Fitzgerald AJA) 5 (2) Compliance with this Code will be monitored by the Tenancy Commissioner and can be enforced under the Fair Trading Act 1987, including by an order made by the Commercial Tribunal. Application 4.(1) The provisions of this Code apply to all suppliers and consumers involved in the retirement village industry, including the following: (d) management; (e) residents. (2) This Code applies: (a) to existing as well as to new retirement villages; Objectives of this Code 5. The objectives of this Code are as follows: (a) to clarify the rights and obligations of residents and management of retirement villages and by doing so to promote fair trading practices in the retirement village industry; (b) to facilitate the disclosure of all important information relevant to a person who is considering entering a particular retirement village; (c) to require contract documents for retirement village accommodation to contain full details of the obligations and entitlements of residents and management; (d) to facilitate resident input, where desired by residents, into the management of retirement villages; (e) to establish appropriate mechanisms for the resolution of any disputes between residents and management or between residents; (f) to encourage the promotion and development of retirement villages in accordance with this Code. General principles guiding the retirement village industry 6. The general principles that are to guide all those involved in the retirement village industry are as follows: (a) that the well-being, rights and interests of residents, together with the rights and interests of management, should be given due consideration; (b) that the freedom of decision and action of residents should be acknowledged in the relationship between residents and management of retirement villages; (e) that residents should be treated fairly and be protected from abuse. Contracts Review Act 1980 8. The provisions of this Code should be read in conjunction with other relevant legislation. In particular, the Contracts Review Act 1980 is applicable to residence contracts and other contracts concerning retirement villages. Sound management 11.(1) All parties must recognise the basic need for the management of the village to be conducted in a sensible and financially prudent manner. 6 UNREPORTED JUDGMENTS (2) Management must ensure that the accounts for the village have been prepared in accordance with recognised Australian Accounting Standards. Pt3 - DISCLOSURE OF INFORMATION Division 1 - General obligations Management obligations regarding the disclosure of information 13(1) All information and contracts relating to a retirement village (b) must fully disclose all of the arrangements which will apply in relation to a resident's occupation of the village; and (c) must be consistent with the provisions of this Code. (3) All information and contracts relating to a retirement village must comply with any relevant legislation, including the following: (a) the Fair Trading Act 1987; (b) the Retirement Villages Act 1989... Division 3 - Disclosure of fees and charges and other information Prospective residents entitled to detailed information 20. Every prospective resident of a retirement village is entitled to be provided with the information required by this Division. The information must be in a separate document to the residence contract. Financial information 21(1) Every prospective resident of a retirement village is entitled to detailed financial information before the person enters into any contract relating to the village. (2) Management must make the following information available to every prospective resident of the retirement village:... (b) a list of all periodical charges or fees payable by a resident, including: (i) a clear outline of the method used to calculate those charges or fees and the method used to determine any variation; and (ii) if different methods are used for different services, items or entitlements, (eg statutory charges, insurances, personal care costs, on site management etc) a list of those methods; (c) a list and description of each of the services (including any personal care services and strata management services) provided for those fees; (f) a detailed budget including any provisions for future maintenance for the village for the current financial year if the village is already operating... Other information about the retirement village 23. Management must make the following information available to every prospective resident of the retirement village: (a) a copy of Schedule A to this Code containing written answers to the questions set out in that Schedule; Services and facilities 27(1) Contracts between management and a resident relating to a retirement village must detail all services and facilities that are to be provided by the management. URJ MURPHY v OVERTON INVESTMENTS PTY LTD (Fitzgerald AJA) 7 (2) This detail must include information as to who is providing the service and whether there is a separate charge for its use. Regular maintenance and service charges 29(1) The residence contract and any other contract between the management and a resident of a retirement village must contain all details necessary to provide a resident with an understanding of: (a) what the resident's recurrent charges will be; and (b) when they must be paid; and (c) what will be provided in return for those charges. (2) Recurrent charges for the current financial year of any such contract and the basis for their future determination must be set out in the contract. Code of Practice and Retirement Villages Act 1989 32(1) The residence contract must draw the resident's attention to the existence of this Code and to the Retirement Villages Act 1989. (2) In particular, the residence contract must: (a) refer to the rights of residents to have disputes heard by the retirement village's disputes committee established under this Code, with further rights to go to the Residential Tenancies Tribunal; and (b) refer to the provisions of this Code relating to the involvement of residents in management. Pt4 - TERMINATION OF CONTRACTS Termination of contracts: introduction 33. Retirement villages are clearly marketed by the industry as permanent accommodation for residents of such villages. Therefore, a resident contract may only be terminated in a limited number of circumstances set out in the Retirement Villages Act and the residence contract. Termination by management 34... Notice of Intention to termination by management 35... Payments on termination by management 36... Termination by residents 37... Payments on termination by resident 38. PtS - VILLAGE MANAGEMENT General principles guiding village management 39. The management structures established in a retirement village must be directed to ensuring that the following principles are adhered to: (a) resident input into the management of retirement villages is to be facilitated, where desired by residents; 8 UNREPORTED JUDGMENTS (b) the freedom of decision and action of residents is to be restricted as little as possible; Structures for resident input 40(1) Management must create appropriate structures for resident input, where desired by residents, in consultation with current residents. (2) Such structures must allow the following: (a) for residents to be provided with the audited accounts of actual expenditure against budget within 4 months of the end of each financial year; (b) for residents to have input into and agree to the budget for each financial year; (c) for residents to have input into and agree to any change to services or facilities which may involve increased costs to residents (beyond those agreed to in the retirement village's budget); (d) for residents to have input into and agree to any change to services or facilities which may lead to loss of amenity by the residents; (e) for residents to have input into and agree to proposals for the upgrading of buildings, fixtures or fittings where the residents are financing either the whole, or part of, the capital or recurrent costs of the work. Resident input into budget 41(1) Management must supply residents with information on financial performance in the current financial year together with a draft budget for the coming financial year within a reasonable time prior to the beginning of the relevant financial year. (2) The draft budget should contain at least the following: (a) sufficient information to explain any increase in fees; (b) information about the costs of services; (c) a general maintenance workplan; (d) where appropriate, details of any upgrading or expansion of facilities and changes or additions to existing services. (3) The final budget must be developed out of consultations between management and residents. (4) Village management must operate the village on the basis of the last approved budget until any proposed budget has been the subject of reasonable consultation and has been agreed to by the residents of the village. Pt6 - DISPUTE RESOLUTION Dispute resolution 43(1) It is recognised that in any communal living situation such as a retirement village where facilities are shared, disputes between residents and management and between residents will arise from time to time. (2) This Code places particular emphasis on providing easy access to an informal and inexpensive process to resolve disputes. Disputes committee 44(1) Management is required to convene a disputes committee to hear and mediate disputes that arise within a retirement village. URJ MURPHY v OVERTON INVESTMENTS PTY LTD (Fitzgerald AJA) 9 (3) The residents and management of the retirement village must agree upon and establish a charter for the disputes committee so that residents and management are aware of the process to be followed should a dispute arise. Appeal mechanism to the Residential Tenancies Tribunal 46(1) The Retirement Villages Act 1989 provides that either the resident or management may apply to the Residential Tenancies Tribunal for an order in respect of a dispute. (2) Applications about a dispute (other than a dispute about a transfer or about village rules) may be made to the Residential Tenancies Tribunal in the following circumstances: (b) where the nature of the dispute or any other circumstances of the case make it inappropriate or undesirable for the dispute to be determined by a disputes committee; (c) where either party to a dispute is dissatisfied with the determination of a disputes committee; (3) The Residential Tenancies Tribunal is not to hear an application about a dispute (other than a dispute about a transfer or about village rules) unless it is of the opinion that: (a) the dispute materially affects a party to the dispute; or (b) it is in the public interest to do so. SCHEDULE A - QUESTIONS TO BE ANSWERED BY MANAGEMENT OF RETIREMENT VILLAGES 10. What arrangements exist for residents to participate in the management of the village? What are the arrangements for residents to be involved in making village rules and setting fees and charges? 11. Have management and residents agreed on a disputes settlement process for the village? Is a copy of the disputes committee charter available on request? 13. Can residents be made liable for any additional or extraordinary charges and, if so, for what purposes?" As earlier noted, the primary judge answered question | in the negative. The material portion of his Honour's reasons for judgment is as follows: The effect of the Codes 1. The first matter to be considered is what is achieved by the relevant regulations. I have set out cl3 of each regulation, which makes the relationship between the Regulation and the Code under s95 of the Fair Trading Act clear. However, a code of practice is not necessarily a statutory enactment creating duties, obligations and rights which can be enforced by action by those involved in the industry in respect of which a code is introduced. The fact that the code provides that it is mandatory, in my view, means no more that it relates to all retirement villages so that its operation cannot be excluded by contract, just as the provisions of the Retirement Villages Act cannot be excluded by contract: s38(1). The fact that a means of enforcement is provided in the code (see para3(2) of the 1995 Code and its 1989 equivalent) supports my view, as does the fact that the 10 UNREPORTED JUDGMENTS code itself provides that the Contracts Review Act 1980 is applicable to residence contracts. Further, many provisions of the code are cast in language which is directed to good behaviour or good management rather than contractual rights. It is not necessary to set these out as general standards of proper organisation and conduct appear throughout the codes, as they do for instance in other codes prescribed pursuant to s75 of the Fair Trading Act, namely the Caravan and Relocatable Home Park Industry Code of Practice Regulation 1992 and the Education Export (Industry) Code of Practice Regulation 1990. Such general statements are not usually to be read as giving rise to private rights enforceable in courts. This, I think, becomes even more apparent when it is realised that individual actions between particular residents and managers should not necessarily bear on contractual terms between other residents or managers who might be happy with things as they are. Thus, while I was at the last moment informed that s79A of the Fair Trading Act had been proclaimed to commence on 1 December 1997, I do not consider that in terms it implies that general code provisions affecting all residents are enforceable other than by the method envisaged by the codes themselves, which method is clearly an appropriate one giving an appropriate general supervising jurisdiction to the Commercial Tribunal. In any event the interpretation of Acts of Parliament cannot be gleaned from later Acts and s79A, inserted into the Act by the Fair Trading (Amendment) Act 1990 is more relevant to s78A inserted by the same Act which does not, as I understand it, apply to the code in question here: 79A(7). 2. The next matter for general consideration is the question of the time of operation of each code and the question of overlap. Obviously the 1989 Code has no operation beyond 31 July 1995 when it was automatically repealed. But it is, I think, clear that it was the code which was relevant to operations during its existence. Thus, insofar as the decision of Cowdroy AJ in Howes' case decided otherwise, I am not prepared to follow it, as I cannot accept the 1995 Code and its requirements, and in particular those within para40 and para41, can bear upon the operation of villages or rights under residence contracts prior to its introduction. 3. The budgets for the years ended 30 June 1994, 1995 and 1996 were all prepared prior to the repeal of the 1989 Regulation. The requirements under Pt5 of the 1989 Code, which required structures to be set up to enable resident input into proposed budgets, the extent of services, upgrading of facilities and the like, on their plain meaning could not operate as pre-conditions to Overton's rights to enforce cl5 of the Memorandum, which forms part of the residence contract. Nor is there any valid reason to think, unless there is some clear statutory or regulatory statement, that somehow a failure to provide the necessary structures should be capable of in some way benefiting a resident who had no objection to proposed actions of the manager. That is another reason to think that the codes do not provide by regulation some form of statutory contract enforceable by residents. Some residents may have different views on what is "a first class retirement village", but whatever it means there is a contractual obligation under the lease terms to provide it, not necessarily to be taken away because no input structure has been set up. 4. The next question is the bearing of para41(4) of the 1995 Code on this matter. I have already set out its terms. There are a number of reasons in addition to the retrospective matter to which I have referred for thinking that it has no effect. The first is that although failure to agree would no doubt give rise to a dispute, a stalemate could not be expected to exist forever, and the dispute is not URJ MURPHY v OVERTON INVESTMENTS PTY LTD (Fitzgerald AJA) 11 one which could be determined by the Residential Tenancies Tribunal in any way other than to require payment as required by the residence contract. The second reason is that the paragraph is of quite uncertain meaning. No doubt to operate means to conduct, but the meaning of "on the basis of the last approved budget" is not so clear. It could not mean the actual budget figures, because if it did the lights might go out during the period of failing to reach agreement. To make sense at all the obligation could only be to operate at the same level of services at a reasonable present cost to provide such services. Further, for the reasons I have set out, I do not consider that the clause bears upon contractual obligations, although I accept it might be possible to bear upon those operations by order of the Commercial Tribunal. Lastly, there must be considered the meaning of "the last approved budget'. It is argued for the residents that, because the word "approved" is used in one place, and "agreed" in another place in the same sentence, the operation of the provision is retrospective in that it relates back to budgets prior to the 1995 Regulation coming into force. I do not consider that interpretation is correct. While under the 1989 Regulation there should have been structures set up to allow residents to have input into and agree to the budget, if there were no agreement, then the residents would be bound by their residence contract. It follows that there may never have been any approved budget. The fact that in the instant case the 1992 budget was approved cannot bear on that. Thus I consider that "last approved budget" can apply only to budgets after the 1995 Code came into force. I point out that to hold otherwise might involve a relation back to any date after any village commenced operation and on no basis could that be thought to be the intended operation of para41(4). It follows from this that breaches of general provisions of the Code do not in themselves bear upon contractual rights and obligations, but an order of the Commercial Tribunal may do so. Nevertheless some specific provisions such as para36 and para38(3) of the 1995 Code may create direct rights. Further as there is no approved budget under para41(4) it is not possible to operate the village on the basis of an approved budget so there could be no breach of para41(4)." Although question 1 is divided into two parts, (i) and (ii), both proceed from a common foundation upon which the appellant-residents' case is based; namely that, because of the matters referred to in para(a), para(b) and para(c) of (i), singly or collectively, the 1989 and/or 1995 Codes of Practice preclude Overton from recovering the outgoings contributions which it has levied in respect of the 1993/94 and subsequent financial years, and hence proceedings by Overton to recover those outgoings contributions from the appellant-residents breach the 1989 and/or 1995 Codes of Practice. The appellant-residents' appeal cannot succeed unless the 1989 and/or 1995 Codes of Practice preclude Overton from recovering outgoings contributions to which it would otherwise be entitled under its residence contracts with the appellant-residents although Overton has not undertaken not to recover such outgoings under s76 of the Fair Trading Act and no order has been made against it under s66 or s78 of that Act.!0 10. Or under s78A of the Fair Trading Act to the extent to which it is material. Nor, of course, has any order been made in respect of any of the residence contracts under the Contracts Review Act or s14 of the RTV Act. An order could not be made under the latter provision which was inconsistent with the residence contracts because of subs31(1)(b) of that Act (sub to s38, which is presently immaterial). 12 UNREPORTED JUDGMENTS The respective arguments on that threshold question can be briefly summarised. The appellant-residents submit that each of the 1989 and 1995 Codes of Practice was or is a source of individual rights and obligations and operated or operates of its own force to preclude Overton from acting in a manner which would conflict with that Code. Overton submits that neither the 1989 nor the 1995 Code of Practice affected or affects the rights and obligations of the appellant-residents and Overton under their residence-contracts, and that the 1989 Code did not, and the 1995 Code does not, give the appellant-residents legal rights against Overton or impose legal obligations upon Overton which are enforceable by the appellant-residents, or available by way of defence to Overton's claim to outgoings contributions levied in accordance with the residence contracts. The 1995 Code is expressed to be "mandatory"!!, and states that all residence contracts must be... consistent with [its] provisions".!2 Some of the Code's "objectives" also tend to indicate that it is intended to directly affect the legal "rights and obligations or residents and management of retirement villages".!3 For example, one objective is "to require contract documents for retirement village accommodation to contain full details of the obligations and entitlements of residents and management*.!4 When attention is directed to the "rights and obligations"!5 for which the 1995 Code provides, they are generally expressed in the broad language of policy objectives rather than the more precise terminology suited to a contractual relationship. Thus, for example, there are references to "good practice for fair dealing",!¢ 'inherent flexibility",!7 the use of "the broad framework of the Fair Trading Act 1987",18 (obligations that meet the needs of all parties...",19 "objectives,"'2%"general principles that are to guide...",2! the "general principles guiding village management',?? "management structures",23 "resident input"24 and "'sound management".25 Further, each code of practice operated or will operate for a limited period after which it was or will be repealed, and codes of practice are, in addition, subject to alteration without the concurrence of either the residents or the owner or manager of this or any other village. The competing considerations so far referred to are not conclusive, one way or the other. The appellant-residents' case is ultimately founded on Pt5 of the 1995 Code of Practice, Village Management", especially cl39 to cl41. While cl39 is again expressed in general policy terms, parts of cl40 and especially cl41 are somewhat more specific. Provision is made for not only "resident input' into decisions, especially decisions related to financial expenditure and increased 11. 1995 Code of Practice, subcl3(1) 12. Ibid, subcl13(1)(c). 13. Ibid, subcl5S(a). 14. Ibid, subcl5(c). 15. 1995 Code of Practice. 16. Ibid, subcl1(1). 17. Ibid subcl1(3). 18. Ibid. 19. Ibid. 20. 1995 Code of Practice cl5. 21. Ibid, cl6. 22. Ibid, cl6. 23. Ibid, cl39. 24. Ibid, cl40. 25. Ibid, cl11. URJ MURPHY v OVERTON INVESTMENTS PTY LTD (Fitzgerald AJA) 13 costs to residents, but for residents' agreement. The standard phrase in cl40 is for residents to have input and agree".26 Subcl41(3) requires each annual budget to 'be developed out of consultations between management and residents", while subcl41(4), which is the provision most directly relied on by the appellant-residents, is as follows" "(4) Village management must operate the village on the basis of the last approved budget until any proposed budget has been the subject of reasonable consultation and has been agreed to by the residents of the village." (Emphasis added). As is well recognised in the law of contract, there are obvious difficulties with the enforceability of a provision requiring further agreement. The parties did not debate whether obligations to act reasonably and and/or in good faith might be implicit in the material provisions of the 1995 Code of Practice, presumably because question 127 ignores that possibility. The material clauses of the 1995 Code of Practice magnify the ordinary difficulties with the enforcement of a provision requiring further agreement, because it is village residents as a whole who must agree and no provision is made for ascertaining the will of the group or for dissentients to be bound by a majority decision. The difficulty is obliquely recognised in Pt6 "Dispute Resolution" of the 1995 Code of Practice, in that subcl43(1) recognises the possibility of disputes "between residents".28 The potential for such disputes arising from conflicting views concerning what facilities, services and costs are appropriate is manifest. Different residents might make inconsistent demands upon an owner or manager such as Overton which, on one view, is not free to disregard even a minority view or act on a majority view, no matter now small the minority. Indeed, conduct on the basis of the majority view might involve breach by Overton of its residence contract with any resident who disagreed with its course of action. For example, some residents might be unwilling to continue to pay for outgoings contributions which others (and Overton) consider necessary for it to operate the village as a "first class retirement village". As recorded earlier, residence contracts for the village have been entered into at different times, some possibly prior to the commencement of the 1989 Code Practice. Overton is party to more than 100 transactions with separate individual residents, some of which might have been preceded by pre-contractual representations or followed by post-contractual promises or associated with other circumstances affecting the respective rights and obligations of Overton and the resident in question. An affirmative answer to question 1 would require that all such considerations be ignored or at least subordinated to the demands of others, in particular the appellant-residents, for the enforcement of (now) the 1995 Code of Practice. Indeed, the generality of question | is such that an affirmative answer would require that PtS of the 1995 Code "Village Management" be accorded dominance over other provisions of the Code itself; for example subcl11(1), which, under the heading "Sound Management", provides: 26. 1995 Code of Practice, subcl40(2), subcl40(2)(b), subcl40(2)(c), subcl40(2)(d) and subcl40(2)(e). 27. Both appellant-residents and Overton assumed that question 1 is susceptible to a simple affirmative or negative answer. 28. Reference has earlier been made to the legislative provisions with respect to the resolution of disputes. 14 UNREPORTED JUDGMENTS "11(1) All parties must recognise the basic need for the management of the village to be conducted in a sensible and financially prudent manner." That admonition, which is directed to "[a]ll parties", is inconsistent with insistence by all or some of the residents that Overton conduct the village "as a first-class retirement village" irrespective of its financial capacity to do so, in circumstances which its recovery of outgoings contributions is confined by reference to the 1992/1993 budget because residents have not agreed to any subsequent budget. I have not overlooked that attempts were made to ameliorate this unattractive position by suggesting that there might be room for movement in the terms of subcl41(4) of the 1995 Code of Practice, especially the phrase "... on the basis of the last approved budget...". However, whatever its meaning, that phrase does not seem to me to fully resolve the appellant-residents' difficulty in connection with question | as it is presently framed. The 1995 Code of Practice is "complementary" to the Retirement Villages Act.29 $14 of that Act and Pt6 of the 1995 Code "Dispute Resolution" provide for the resolution of limited categories of disputes by the Residential Tenancies Tribunal. Under s98 of that Act, the Tenancy Commissioner can join in a proceeding in that Tribunal. However, subject to subs31(2), and subs31(1)(b) of the Retirement Villages Act restricts the Residential Tenancies Tribunal to orders which are consistent with both a material code of practice and the applicable residence contract.30 The provision of the 1995 Code of Practice which is of primary importance for present purposes is subc13(2), which envisages that the "obligations"3! for which the Code provides "will be monitored... and can be enforced" under the Fair Trading Act. Consistently with established principles of statutory construction this should be regarded as the intended method of enforcement.32 Reference has already been made to the material provisions of the Fair Trading Act. It is a central feature of the scheme contained in that Act that a code obligation can only be enforced by, or with the consent of, the Director-General of the Department of Fair Trading.33 This ensures that individual residents or groups of residents, or an owner of manager, cannot take manipulative advantage of a code of practice or frustrate the exercise of rights or the performance of obligations under residence contracts contrary to "good practice for fair dealing'"34 and "the basic need for the management of the village to be conducted in a sensible and financially prudent manner."35 Under the regime established by the Fair Trading Act and the Codes of Practice, the views of interested persons other than the immediate disputants can be ascertained and taken into account. In my opinion, the presently material legal effect of the Codes of Practice was, and is, to provide a basis for the imposition of restrictions on Overton and to give effect to the appellant-residents' rights under the Codes by undertaking or order, as provided for by the Fair Trading Act. Until that occurs, Overton is entitled to enforce the residence contracts according to their terms. 29. Ibid, subcl1(1). 30. Except to the extent that a provision of a resident contract contravenes s38 of the Retirement Villages Act. 31. Ibid, subcl1(3). 32. See, for example, Barraclough v Brown [1897] AC 615; Stubbs v NRMA Insurance Ltd (1997) 42 NSWLR 550. 33. Or other prescribed "consent authority"; Fair Trading Act subs78A. 34. Ibid subcl3(2). 35. Ibid, subcl(11)(1). URJ MURPHY v OVERTON INVESTMENTS PTY LTD (Fitzgerald AJA) 15 It follows that the primary judge was correct in answering question | in the negative. Question 2 The second question relates to an application made by Overton to the Residential Tenancies Tribunal. Overton sought orders that, again subject to any injunction pursuant to s66 of the Fair Trading Act, any undertaking pursuant to s76 of that Act, or any order pursuant to s78 of that Act, residents of the village meet and agree budgets for the years ended 30 June 1994, 1995, 1996, 1997, and failing agreement: (i) the residents be deemed to have agreed to each such budget; (ii) Overton be permitted to levy contributions on the basis that the budgets be deemed to have been agreed; and (iii) the residents be obliged to pay contributions levied on that basis. However, as stated in the Equity Division judgment: "Tn the hearing before the Tribunal alternative orders were apparently sought that the Residence Contract, which was really a lease, be performed by payment of the amount determined by Overton as due pursuant to the lease or payment of an amount determined by the Tribunal having regard to the term of the Residence Contract and the audited account." After referring to proceedings in the Residential Tenancies Tribunal. the primary judge restated question 2 in the following terms: Whether, subject to: (a) any injunction granted pursuant to s66 Fair Trading Act, (b) any undertaking given pursuant to s76 of the Fair Trading Act, or (c) any order made pursuant to s78 of the Fair Trading Act, the Residential Tenancies Tribunal has power pursuant to sl4 of the Retirement Villages Act 1989: (i) to make an order for the payment of money by the Party Residents or any of them, in respect of contributions to Outgoings and Outgoings of Apartments for 1993/1994 and succeeding years otherwise payable under their respective leases by virtue of cl5 of the Memorandum, over and above the items and amounts of the budgets approved by the Village residents for 1992/93, notwithstanding any breach of Pt5 of the 1989 Code of Practice or cl40 or cl41 of the 1995 Code of Practice. (ii) to make an order requiring the party residents, or any of them to agree to the budget for the village proposed by Overton for 1996/97." Question (2)(i) was answered in the affirmative and question 2(ii) in the negative. The appeal with respect to question 2 was limited to the former answer, that is, to the affirmative answer to question 2(i). The material portion of the judgment is brief. His Honour stated: "In argument this was generally described as a question of jurisdiction but as Dr Flick pointed out it was really a question of power. It should be added that is how the Residential Tenancies Tribunal really dealt with it. There is no doubt a dispute exists between residents and the manager so that under s14 of the Retirement Villages Act an application can be made to the Residential Tenancies Tribunal for an order in respect of that dispute. The answer to question 2(i) as framed must be "yes" as it is accepted there could be no freeze on amounts. However, it is proper to go a little further. An order could not be made which would be inconsistent with the residence contract: s31(1)(b) Retirement Villages Act. However, an order could be made requiring payment of amounts properly payable under cl5 of the lease memorandum unless 16 UNREPORTED JUDGMENTS that order were inconsistent with any applicable code (s31(1)(a)). As I have held that the applicable code for the period up to 31 July 1995 is the 1989 Code then, as I have explained, there is nothing to prevent a monetary order being made for amounts due up to that date. Nevertheless it is correct that the Tribunal would not have had power to make the orders sought in the actual applications as it could not force agreement, but of course, the Tribunal has power of its own motion with consent of the applicant to amend the application. Similarly, for the reasons I have given, there is no reason why an order should not be made in respect of the amount claimed for the year ended 30 June 1997 as to do so would not involve inconsistency with the 1995 Code. It cannot be a breach of para41(4) of that Code if there is no prior approved budget. And inconsistency with that Code does not necessarily equate with non-compliance with provisions of a Code." The appellant-residents' argument was essentially that, since the Residential Tenancies Tribunal lacked power to make the orders initially sought by Overton, it lacked any jurisdiction in the matter and, accordingly, lacked power to amend Overton's application so as to convert it into a money claim. However, it was not disputed that the Tribunal has power to make orders for the payment of money in a dispute between Overton and the appellant-residents,3© and it is not entirely clear that the appellant-residents persisted with this portion of their appeal in their oral argument. Nonetheless, in my opinion, the primary judge answered question 2(i) incorrectly. His Honour arrived at an affirmative answer to question 2(i) by concluding that Overton had not materially breached either Code of Practice and would not do so by obtaining the orders against the appellant-residents for which it has applied to the Tribunal. That is not an issue which has been litigated, or which was raised by question 2(i). On the contrary that question, as reformulated in the Equity Division, requires an assumption that there has been, or will be, breach of Pt5 of the 1989 Code of Practice and cl40 and cl4 of the 1995 Code of Practice,37 ie, by Overton. Once this point is reached, question 2(i) must be answered in the negative because of subs31(1)(a) of the Residential Tenancies Act, which prohibits an order of by the Tribunal which is "inconsistent with any applicable code". Conclusion The appeal should be allowed to the extent that a negative answer should be submitted for the affirmative answer given in the Equity Division to question 2(i). Otherwise the appeal should be dismissed. The appellant-residents should pay 75% of the costs of Overton, which was successful on the major issue raised in the appeal. Appeal allowed to the extent that a negative answer should be submitted for the affirmative answer given in the Equity Division to question 2(i). Otherwise the appeal is dismissed. Counsel for the appellant: G M Moore Solicitors for the appellant: Veronica Wise Counsel for the first respondent: J C Campbell QC/R P Rana 36. Residential Tenancies Act, subs14(8). 37. See the concluding phrase in question 2(i) commencing "notwithstanding". URJ MURPHY v OVERTON INVESTMENTS PTY LTD (Fitzgerald AJA) 17 Solicitors for the first respondent: Gadens Counsel for the second and third respondents: Dr G A Flick/C Ronalds Solicitors for the second and third respondents: C L Pacey