Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Trevor Olrog and Annette Olrog v Halliday Shores Retirement Village Pty Ltd [2014] NSWCATCD 168 Hearing dates: 13 August 2014 Decision date: 08 September 2014 Before: JA Levingston, General Member Decision: 1. The application is dismissed. 2. The exhibits are to be returned to the parties. Catchwords: RETIREMENT VILLAGE - departure fee - application for partial refund - alleged unfair conduct of operator causing financial hardship to applicants - no evidence to support allegation Legislation Cited: Civil and Administrative Tribunal Act (NSW) 2013 s 29 Retirement Villages Act 1999 (NSW) ss 43, 123, 126, 128, 161, 168, 180(5) Cases Cited: Nil Texts Cited: Nil Category: Principal judgment Parties: Trevor Olrog and Annette Olrog (applicants) Halliday Shores Retirement Village Pty Ltd (respondent) Representation: Nil Nil File Number(s): RV 14/12195 Publication restriction: Unrestricted reasons for decision Application 1This is an application filed on 28 February 2014 pursuant to the Retirement Villages Act 1999 (RVA) ss 161 and 180 for a partial refund of the departure fee charged by the respondent. Appearances 2Both parties appeared and the application was opposed. Jurisdiction 3The Tribunal has jurisdiction pursuant to the Civil and Administrative Tribunal Act 2013 (NSW) ("CATA") s 29 (General jurisdiction) and Schedule 4 clause 3 (Functions allocated to Division); and power to make orders pursuant to the RVA ss 123 (Jurisdiction of the Tribunal), 126 (Ancillary orders), 127 (No monetary limit on jurisdiction of Tribunal), 128 (Order of Tribunal) and 180 (Payments to former occupants who were registered interest holders) directing the operator to recalculate an amount due to former occupants in accordance with directions of the Tribunal; pay any additional amount due to the former occupant as a result of the recalculation, and order the payment of interest on that additional amount at the rate prescribed by the RVR cl 28 which applies the rate in the Civil Procedure Act 2005 (NSW) s 101 for interest on a judgment debt. Facts 4The material facts are: (a)The respondent operates Halliday Shores Retirement Village (Halliday Shores) which contains residential premises that are or intended to be predominantly or exclusively occupied by retired persons who have entered into village contracts with an operator of the complex; (b)The applicants were retired and interested in acquiring a residential villa as lessees from the respondent; (c)On 15 December 2008 the parties made a written Agreement in which the applicants purchased a lease interest in Villa 41 at Halliday Shores for a purchase price of $439,642.00 (the Agreement); (d)The Agreement was in the standard form set out in the Regulations schedule 1, and relevantly contained a term in relation to the respondents paying a departure fee: see the definition of departure fee at exhibit G Agreement at p21 definition of "Departure Fee" which sets out the formula for calculating the departure fee, which the parties agreed creased by 7% pa to a maximum of 35% of the selling price less the value of any capital items after depreciation; (e)In September 2010 the applicants instructed the respondent to sell Villa 41 and set a selling price of $525,000.00. The applicants decided not to appoint an outside selling agent; (f)The respondent commenced marketing Villa 41 within their marketing and sales promotion of units available at Halliday Shores. This included sales Expos in Canberra, Newcastle and Sydney; open days which resulted in about 100 potential buyers at a time; radio advertising; print advertising directed at members of Bowls Clubs and Seniors magazines; and the respondent estimated about 200 persons viewed Villa 41; (g)In addition, the applicants had printed pamphlets promoting Villa 41 but discontinued their use as they decided that this was also bringing potential buyers for other competing villas for sale at Halliday Shores; (h)In early 2011 a potential buyer was interested in Villa 41 and paid a refundable "deposit" for a 60 day "expression of interest" whilst her home was put up for sale, but she could not proceed as she could not sell her house; another potential buyer was interested at $510,000.00 but decided to purchase a property outside Halliday Shores; and there was another potential buyer who did not proceed beyond expressing interest; (i)Mrs Todd was interested in Villa 41 but later decided to buy Villa 53 for $50,000.00 less on 12 May 2013: see exhibit 1, Statutory Declaration of Jean Mallyree Todd made 1 May 2014: "My then partner...and myself were shown over Villa 41 ...Len and I were very taken with it so we put a deposit on it. At that time I was living at Wyoming and the house had a very run down bathroom...so I had the bathroom, ensuite and laundry done up. It cost me about $30,000.00, but when I finally sold, I sold it at quite a loss...I decided to keep my deposit on Villa 41, I had my deposit on an ongoing basis from memory, and if someone else wanted to buy Villa 41 I would have had to make a decision to purchase it. It was at such a loss when I finally sold that I was a bit hesitant about buying Villa 41 so I came up to see if there was anything else, because I wanted to buy in this village. Mark McClusky showed me over a couple of unfinished ones that were being built and I was not really keen on them. He said that the people in Villa 53 were thinking about selling but it was not for sale yet. He said if I like I could see over it. I saw over it and promptly said I would buy it. My decision was based on financial circumstances...I had sold my home for a lot less and that made me hesitant to buy Villa 41. Villa 53 was about $50,000 cheaper, and left me with some money to live on and travel with. These were the reasons I chose to buy Villa 53 and not Villa 41. I was not influenced in any way by the village representatives." (j)During the period Villa 41 was for sale, the respondent sold about three other villas, but all were sold for less than Villa 41. The applicants were advised to drop their price but Mr Olrog said: "I've done my calculations. I can't afford to drop my price"; (k)However, the applicants later agreed to drop their price and on 29 November 2013 sale of Villa 41 was completed for $480,000.00; (l)The respondent allowed the applicants $10,000.00 against the departure fee to offset the price reduction, and the applicants permanently vacated Halliday Shores; (m)By 29 November 2013 the departure fee had increased to $164,925.00. The contentions 5The applicants contend that the respondent is liable for their loss in the sum of $41,639.00 (calculated as the difference between the departure fee of $164,925.00 on 29 November 2013 and the departure fee of $113,286.00 on 12 May 2013 if Mrs Todd had purchased Villa 41 instead of Villa 53) being $51,639.00 less $10,000.00 (the amount allowed by the respondent) totalling $41,639.00: see exhibit A page 13 (Calculation to claim a partial refund of the departure fee); which they contend was caused by the respondent's conduct: (a) Insufficient marketing; (b) The applicants were disempowered as they had no direct control over the sale of Villa 41; (c) Loss of a sale to Mrs Todd who had been told Villa 41 was no longer available to purchase; (d) Respondent acted in its own financial interest to secure ongoing fees of $90.00 per day from the applicants. 6The respondent disputes these contentions and says: (a) It conducted extensive marketing for Halliday Shores, during which they estimate Villa 41 was shown to about 200 persons; (b) The applicants were entitled by the RVA s168 to appoint an agent to conduct the marketing but did not, and they had unrestrained power to set the sales price, which was too high; (c) Mrs Todd was not told by the respondent that Villa 41 had been sold and the reason she purchased Villa 53 was a price $50,000 cheaper; (d) The respondents had no financial incentive not to sell Villa 41. Law 7The RVA sets out the rights and obligations of residents and operators of retirement villages. It relevantly provides that the parties must make a written agreement: RVA ss 24 (Resident to enter village contract); 26 (Village contracts to be in writing); and provides for a standard form in the RV Regulations (RVR): RVA s 43 and RVR clause 15 and Schedule 2 for inclusions and Schedule 3 for exclusions; with a signed copy to be provided to the resident applicants within 14 days: RVA s 39 (Operator to give residents and prospective residents copies of village contracts). There was no dispute about these matters. 8An application must be made within time: RVR cl 38 (Time for making application to Tribunal) which does not apply to an application under RVA s 161 and the Limitation Act applies. The application was brought within time. 9There was no dispute about RVA s 80 (Notice of intention to vacate) which prohibits any term requiring more than one month's notice of an intention to vacate. 10RVA s 128(1) sets out the orders which can be made by the Tribunal, on application by a resident or operator, relevantly including payment of money or compensation: s 128(e) and (f); and s 126 provides that the Tribunal may also make an order ancillary to the orders made in s 128 including compensation for a loss arising from an increased departure fee incurred, if the loss was caused by the respondent's unfair conduct which had a negative financial impact on them: RVA s180. Marketing 11The evidence shows that the respondent undertook marketing of Villa 41 within their advertising program conducted by a very experienced sales and marketing manager, and they spent over $400,000.00 in 11 months to 30 June 2012 and a further $400,000.00 to 30 June 2013: exhibit 1, Statement of Mark Thomas Dixon at [16] to [21], and in [22] the respondent adopted a "strong emphasis on selling the Olrogs' home and believe that well over 200 people inspected the home"; of whom four (not including the final buyer) showed a positive interest but for various reasons did not proceed to sale. 12It is difficult to understand what else the respondent could have done. There was nothing preventing the applicants from appointing an independent sales agent, but they chose not to. There is no basis for finding that the respondent's marketing was unfair or insufficient. Applicants disempowered 13The applicants contend they were disempowered in the sale of Villa 41, but RVA s 168 (Sale of premises) relevantly empowered them to manage the sale of their unit by setting the sale price, and appointing a selling agent of their choice (who may be the operator of the village if the operator is eligible to be appointed). 14There is no evidence to support the applicants' contention that they were disempowered. The applicants set the sale price, rather than allow the respondent to set it under RVA s 168(2). The respondent was obliged to notify the applicants of all offers: RVA s 168(5)(a); and provide a report at the end of each month if the applicants requested one: RVA s168(5)(b) with the marketing and inquiry details set out therein. There was no contest about these matters. In addition, the applicants had printed pamphlets promoting Villa 41 but decided to discontinue this practice as they reasoned it brought potential buyers who would also view competing villas for sale. Similarly they considered the appointment of an outside real estate agent but decided against the course. This claim fails. Loss of sale to Mrs Todd 15The applicants' contention that the fair conduct of the respondent resulted in the loss of sale to Mrs Todd must fail as her decision was based on a saving of $50,000.00 for Villa 53. Respondent acting in own interest 16A "departure fee" is defined in RVA s 156 (What is a "departure fee"?) and by RVA Schedule 4 clause 11 (Departure fees) which includes a deferred management fee and a deferred fee. The operator is required to disclose whether a departure fee is payable: RVR cl 11(1) Form 1 - General inquiry document "Financial matters ... Do residents pay a departure fee when they leave? Yes/No". RVR cl 11(2) requires the operator to provide a Disclosure statement setting out the formula for calculating the departure fee. RVA s157 (Payment of departure fee) provides how the departure fee is to be paid. The calculation of the departure fee was provided by the respondent: see exhibit G at p21; and is not in dispute. 17This contention was the subject of cross-examination, and Mr Olrog conceded that the applicants could have brought the departure fee accumulation to an end earlier by permanently departing Villa 41, but they chose not to because they had no-where else to live. The period the departure fee may be charged is defined in RVA s 158 (Period for which departure fee may be charged after permanent vacation of premises: new contracts): (2) A departure fee is not payable to the extent that it is calculated in respect of a period after the former occupant permanently vacated the residential premises concerned. which was payable in this matter until the applicants permanently vacated the premises. 18The applicants' departure fee was calculated at 7% pa from the commencement of each lease for five years to a maximum of 5 years and 35%. The applicants' lease of Villa 41 was within the first five years and was subject to the accumulating 7% pa. Logically, from the time the applicants' lease was sold to another buyer the fee ceased to be payable by the applicants and was payable by the new lessee, and it made no difference to the respondent who was paying it. This argument fails. Reduction of departure fee 19The applicants claim a reduction of the departure fee. RVA s161 (Reduction or waiver of departure fee) relevantly provides: (1) The Tribunal may, on the application of a former occupant whose village contract providing for payment of a departure fee was in force before the commencement of this section, make an order reducing or waiving the former occupant's liability for such part of the departure fee as is calculated in respect of a period after the former occupant has permanently vacated the residential premises concerned. (2) However, the Tribunal may make such an order only if the Tribunal is of the opinion that any delay in the operator's entering into a village contract with another person in respect of the premises is attributable to any action (including a failure to market or promote the premises) of the operator. 20The power of the Tribunal to make an order under RVA s 161(1) is limited to a contract made before the commencement of s161, which was the subject of Am 2008 No 121, Sch 1 [136] Retirement Villages Amendment Act 2008. Assented to 10 December 2008. Date of commencement, 1 March 2010, sec 2 and 2009 (578) LW 18 December 2009. Sch 1 [56] was not commenced and was repealed by the Statute Law (Miscellaneous Provisions) Act (No 2) 2009 No 106. Amended by the Statute Law (Miscellaneous Provisions) Act (No 2) 2009 No 106. Assented to 14 December 2009. Date of commencement of Sch 1.16, 8 January 2010, sec 2 (2). 21The Agreement was made 15 December 2008 which came after assent on 10 December 2008 but before the commencement on 1 March 2010. 22RVA s 161(2) requires the applicants to prove that any delay was caused by the conduct of the respondent, which can be an act or omission, and an example given in the section is a failure of the respondent to promote the premises. 23However, the evidence is that the respondent took reasonable steps to sell Villa 41, but a sale could not be achieved as the sale price set by the applicants was more than the market would pay, and they did not achieve a sale until they lowered their price to meet the market. 24The loss of the sale to Mrs Todd was not caused by the respondent, but was the exercise of free choice by Mrs Todd who decided to purchase Villa 53 for $50,000.00 less than the price asked by the applicants. This argument also fails. Conclusion 25The applicants relied on RVA s 180 (Payments to former occupants who were registered interest holders) to bring their application on the ground that the respondent's conduct unfairly had a negative financial impact on them. However, for the reasons set out herein there is no evidence on which the Tribunal could make an order directing the respondent to recalculate the amount in accordance with the directions of the Tribunal, and pay any additional amount due to the former occupant as a result of the recalculation, and to pay interest on that amount. 26It was the applicants own conduct that caused the delay in selling Villa 41 and the increase in the departure fee. There is no evidence to support the applicants' contentions that the respondent's conduct, by act or omission, was the cause of the applicants being unable to sell Villa 41 for an extended period of time. 27In the circumstances the application must be dismissed. JA Levingston Member Civil and Administrative Tribunal of New South Wales 8 September 2014 I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 October 2014