Civil and Administrative Tribunal New South Wales Medium Neutral Citation: RSL Life Care Ltd v Lamb [2015] NSWCATAP 251 Hearing dates: 30 June 2015 Date of orders: 24 November 2015 Decision date: 24 November 2015 Jurisdiction: Appeal Panel Before: L Robberds QC, Senior Member S Thode, Senior Member Decision: (1) The appeal is dismissed. Catchwords: RETIREMENT VILLAGES - Village Contract – prescribed standard form – non-compliance with prescribed form – maximum amount payable by resident for legal and other expenses incurred by operator in connection with preparation of village contract fixed at $200 – loan agreement required residents to pay $600 towards the costs of preparation of that agreement – was the loan agreement a village contract Legislation Cited: Retirement Villages Act 1999 (NSW) Retirement Villages Regulation 2009 (NSW) Cases Cited: Minister for Immigration and Multicultural Affairs v Singh (2000) 98 FCR 469 Re. Nanaimo Community Hotel Limited [1945] 3 DLR 225 Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 R v Orcher (1999) 48 NSWLR 273 Health Insurance Commission v Freeman (1998) 158 ALR 267 Taciak v Commissioner of Australian Federal Police (1995) 59 FCR 285 Category: Principal judgment Parties: RSL Life Care Ltd (Appellant) Robert Lamb and Sharon Lamb (Respondents) Representation: Counsel: B Ilkovski (Appellant) Solicitors: Atkinson Vinden (Appellant) Emil Ford (Respondents) File Number(s): AP 15/15083 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 24 February 2015 Before: D Sheehan, General Member File Number(s): RV 14/47803 REASONS FOR DECISION Introduction 1. On 19 September 2014 the solicitor for Robert James Lamb and Sharon Margaret Lamb (the respondents) filed in the Tribunal a retirement villages application against RSL Life Care Limited (the appellant). The application claimed the following orders under the Retirement Villages Act 1999 (NSW) (the Act): 1. setting aside clause C of the "Financial Terms of the sublease" – s 82 (4); 2. that the village Contract is harsh, oppressive, unconscionable and unjust in that it requires the Resident to pay accounts for legal costs in excess of the amount prescribed by the Act and the regulations - s 123 (1); 3. directing the operator to comply with a requirement of the Act or the regulations – s 128 (1) (a); and 4. for the payment of an amount of money- s 128 (1) (e). 1. After a contested hearing on 10 December 2014 the Tribunal made the following orders: 1. The subclause in clause C (at page 9) in the sublease, namely, "Other legal costs associated with preparation of Loan Agreement being $600 (plus GST)" is set aside under section 82 (4) as being in breach of the Retirement Villages Act 1999 and Regulations; and 2. The respondent [i.e. RSL Life Care Limited] is to pay the applicant the sum of $782.50 on or before 20 April 2015. 1. The Tribunal made no finding or order under s 123 (1) or s 128 (1) (a) in view of the first of the above two orders. 2. The appellant has appealed from this decision, as it is entitled to, under s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the CAT Act). 3. The Appeal Panel has concluded that the appeal should be dismissed. Our reasons for so concluding are set out below. Notice of Appeal 1. The appellant filed a notice of appeal dated 27 March 2015 and challenged both of the above orders. The notice of appeal proceeds on a question of law only. The notice of appeal does not seek leave to appeal on any other grounds (s 80(2)(b)). 2. The appellant relied upon the two following grounds of appeal : 1. on the question whether (the appellant) was entitled to charge (the respondents) $600 plus GST for the preparation of the loan agreement, the Tribunal erred in: 1. finding that: 1. the loan agreement was a village contract within the meaning of the Act; 2. the loan agreement was the same village contract as the sublease; 1. making the alternative finding that: 1. the charge of $600 (plus GST) for the preparation of the loan agreement should not have been specified as a "charge to third parties" in clause C of the sublease titled "Legal and other expenses payable on entry"; 2. specifying it as such meant that the loan agreement was prepared in breach of reg 15 A (3) of the Retirement Village Regulation 2009; and 3. the charge of $600 (plus GST) for the preparation of the loan agreement is subsumed by the charge for the sublease. 1. further finding that: 1. the types and numbers of contracts between an operator and a prospective resident is limited by the definition of village contract in s 4 of the Act to the four classes specified in that definition; and 2. there is no provision in the standard form agreement for an operator to separately charge for the preparation of the loan agreement. 1. on the question whether the appellant was able to charge the respondents $27.50 to attend on the Land and Property Information Office to lodge the sublease, the Tribunal erred in finding that the failure to set out that amount in clause C in the sublease meant that it was not an allowable charge. 1. The appellant sought to have the above orders set aside. It sought an order that the respondents pay to the appellant the sum of $95 and the costs of the proceedings and of the appeal and that otherwise the application be dismissed. 2. The Tribunal recorded in its reasons for decision given on 24 February 2015, that there was no dispute in relation to the evidence, the relevant documents being tendered by both parties; that the respondents entered into a leasehold and loan arrangement with the appellant to occupy a unit in a retirement village; that the appellant is a village operator for the purposes of the Act; and that the respondents are residents occupying a unit in their retirement village (see pars 9 – 10 of the reasons). It was further agreed that the parties had also entered into a services and facilities agreement (see par 11 of the reasons). 3. Documents tendered by the parties included undated and unsigned copies of a sublease between the appellant, as sub lessor and the respondents as sublessees; a services and facilities agreement between the parties; and a loan agreement made by deed between the appellant and the respondents which recorded that the respondents had agreed to make a loan to the appellant on the terms and conditions set out in the deed. The amount of the loan was $407,250. 4. There were a number of issues between the parties but in the final analysis the two major issues were whether: 1. the appellant was entitled to charge the respondents $27.50 for an attendance at the Land and Property Information Office to lodge the sublease. However this issue was not pressed at the hearing of the appeal; and 2. the appellant was entitled to charge the respondents $600 plus GST for legal costs incurred by the appellant associated with preparation of the loan agreement. The legislation 1. The Act and the Retirement Villages Regulation 2009 (the Regulation) regulate the form of the contract that can be entered into between an operator of a retirement village and a prospective resident of a unit in the village. 2. Pursuant to s 43 of the Act, reg 15A of the Regulation has prescribed the standard form of village contract. It is set out in schedule 2 of the Regulation. 3. Pursuant to s 31 (3) of the Act, the Regulation has fixed the maximum amount payable by a resident for legal and other expenses incurred by the operator in connection with the preparation of a village contract, at $200. 4. Section 4 of the Act defines "village contract" to relevantly mean: a residence contract or a service contract, or ….. Note. A residence contract and any other village contract may be contained in a single document. 1. The Act defines "residence contract" to mean a contract that gives rise to a residence right. 2. The Act relevantly defines "residence right of a person" to mean the person's right to occupy residential premises in a retirement village, being a right arising from a contract: … (c) in the form of a lease, …. 1. Section 31 deals with the costs of preparation of village contracts and it relevantly provides: (1) Legal and other expenses incurred by the operator of a retirement village in connection with the preparation of a village contract are payable by the operator and the resident concerned in equal shares (except as provided by section 30). … (3) The regulations may prescribe a maximum amount payable by a resident for legal and other expenses incurred by the operator in connection with the preparation of a village contract. (4) If the regulations prescribe such a maximum amount, any difference between the resident's share of the amount incurred by the operator and the maximum amount prescribed is payable by the operator. (5) If a residence contract is in the form of a lease: (a) duty (if any) payable on the lease, and (b) the registration fee (if the lease is to be registered under the Real Property Act 1900 ), is payable by the resident. … 1. The standard form of village contract is dealt with by s 43 of the Act and it relevantly provides: (1) The regulations may prescribe a standard form of village contract. (2) The regulations may provide for: (a) more than one standard form of village contract, or (b) the addition of clauses to, or the omission or variation of clauses contained in, the standard form or forms, for use in relation to different classes of village contracts (including different classes of residence contracts) or different classes of residential premises. (3) A village contract for which a standard form is prescribed, and that is entered into after the day on which the form is prescribed, is void to the extent to which it is not in or to the effect of the standard form. (4) Any such contract that does not include a term of the form of contract that is the standard form at the time the contract is entered into is taken to include that term. (5) The terms contained in a prescribed standard form of village contract are not to be varied by the parties to a village contract for which the form is prescribed, and, to the extent that they are so varied, are taken not to have been varied. (6) However: (a) nothing in subsection (3) or (5) voids any residence right conferred by the village contract concerned, and (b) despite those subsections, the parties to a village contract for which a standard form is prescribed may insert additional terms in the contract, but only if the terms: (i) do not contravene this or any other Act or law, and (ii) are not inconsistent with a term of the prescribed village contract. … 1. Regulation 13 deals with the amount payable for legal and other expenses and is in the following terms: For the purposes of s 31 (3) of the Act, the maximum amount payable by a resident for legal and other expenses incurred by the operator in connection with the preparation of a village contract is $200. 1. The standard form of village contract is dealt with by reg 15A and is in the following terms: (1) For the purposes of section 43 (1) of the Act, the standard form of village contract is the form set out in Schedule 2. (2) The standard form of village contract is prescribed for all village contracts except the following: … Note : A service contract relating to premises referred to in subclause (2) (b) must be in the standard form of village contract. (3) The operator of a retirement village must not enter into a village contract for which the standard form of village contract is prescribed, knowing that it is not in or to the effect of the standard form. Maximum penalty: 50 penalty units. The Appellant's Submissions 1. Without going into the detail, the Appellant's written submission may be summarised as follows: 1. the Tribunal wrongly concluded that: 1. the loan agreement was a village contract; 2. it was prepared in breach of reg 15(A); 3. the types and numbers of contracts between an operator and a prospective resident was limited by the definition of village contract in s 4 of the Act to the four classes specified in that definition; 1. they summarised the legislative scheme of the Act; 2. they included arguments as to why the loan agreement was not a village contract and why it was not prepared in breach of reg 15(A); 3. they included arguments as to why the definition of village contract in s 4 of the Act did not limit contracts to the four classes there mentioned; 1. A submission was made orally that the words "in connection with" were not wide enough to include the loan agreement. 2. For the reasons set out below, it is only necessary for the Appeal Panel to make rulings on the submissions referred to in pars 22 (a) (i), (ii), (b) and 23 above. For the same reasons, it is unnecessary for the Appeal Panel to make rulings on grounds of appeal 1 (a) (ii), 1 (b) or 1 (c). None of those grounds can alter the Appeal Panel's findings or reasons in pars 38-67 below. Ground 2 of the appeal was abandoned at the hearing before the Tribunal. The relevant documents 1. There are two documents which require consideration namely: 1. the sublease whereby the appellant leased a unit in a retirement village to the respondents for a term of ninety five years; and 2. the loan agreement made by deed between the parties in which it was recorded that the respondents had agreed to make a loan to the appellant on the terms set out in the deed. 1. It is necessary to analyse these documents to see whether or not: 1. the clauses in them requiring the respondents to pay $600 plus GST towards the appellant's legal costs associated with the preparation of the loan agreement breach s 43 (3) of the Act; 2. words contained in the loan agreement and the sublease vary the terms contained in the prescribed form of village contract with the result that by the operation of s 43 (5) of the Act, those varied terms contained in the sublease are taken not to have been varied; and 3. the loan agreement is a village contract. The standard form of village contract 1. The third page of the standard form of village contract contains a heading "Financial terms". Term C states as follows: C Legal and other expenses payable on entry You must pay to us on entry the following legal and other expenses incurred in connection with the preparation of this contract: (maximum $200). Contribution to our legal expenses incurred in preparing this contract $ Other expenses (specify) You must pay the following charges to third parties: Lease registration fee $ Other (specify) [If "Contract subject to other box is ticked" (delete or cross out if not applicable)] Additional fees may be payable under the separate contract you have entered into to acquire the premises (or, for company title, the shares which entitle you to occupy the premises). 1. There is a box opposite each of: "Contribution to our legal expenses incurred in preparing the contract $", "Other expenses (specify) ", "Lease registration fee $", and "Other (specify)." 2. On page 18 of the standard form there is a heading "Additional terms" under which the following appears: NOTE: ANY ADDITIONAL TERMS ARE NOT REQUIRED BY LAW AND ARE NEGOTIABLE BEFORE YOU SIGN THIS CONTRACT. Additional terms may be inserted here, but only if: they do not contravene the retirement village laws or any other law, and they are not inconsistent with the standard terms prescribed under the retirement village laws. 1. Page 8 of the sublease sets out "Financial terms". Term C is as follows: C. Legal and other expenses payable on entry You must pay to us on entry the following legal and other expenses incurred in connection with the preparation of this contract: (maximum $200) Contribution to our legal expenses incurred in preparing this contract $200 plus GST Contribution to our legal expenses incurred in preparing the Services & Facilities Agreement being $200.00 (plus GST) You must pay the following charges to third parties: Lease registration fee $104.50 Other Legal costs associated with preparation of Loan Agreement being $600.00 (plus GST) 1. Opposite each of these four examples is a box which has been filled in with an X. 2. There was no dispute between the parties that the appellant was entitled to charge $200 plus GST as a contribution to the legal expenses incurred in preparing the Services & Facilities Agreement. The Appeal Panel will therefore not make any relevant comment concerning that agreement. 3. It is clear that the "Loan Agreement" referred to in term C above of the sublease, is a reference to the loan agreement made by deed between the parties referred to in par 25 (b) above. 4. Page 2 of that agreement has a heading "Background" and two of the clauses under that heading are as follows: A. The Operator has agreed to grant and the Resident has agreed to accept, a lease over the Unit pursuant to the Contract of even date herewith. B. The Resident has agreed to make a loan to the Operator on the terms and conditions set out in this Deed. 1. Clause 1 of the loan agreement is in the following terms: 1. Definitions and interpretation "Deed" means this Loan Agreement. Collateral to and interdependent to this Deed are the Contract and Services Agreement and any other document entered into during the Term of the Lease between the Operator and the Resident. "Contract" means the Sublease of the Unit between the Resident and the Operator of even date herewith. The definitions and rules of interpretation set out in the Lease are imported into this Deed as though they are specifically reproduced herein. 1. Clause 12 of that agreement is in the following terms: 12. Legal Costs 12.1 The Resident must pay the sum of $600.00 towards the Operator's costs of preparation of this Deed. 12.2 The Operator cannot be required to attend to registration of the Lease until the amount referred to in Clause 12.1 has been paid. 1. The sublease is a village contract for which a standard form is prescribed by regulation 15 A (1). Consideration 1. Section 43 (3) of the Act relevantly provides that a village contract for which a standard form is prescribed, is void to the extent to which it is not in or to the effect of the standard form. 2. The sublease is not in or to the effect of the standard form because it contains the words in item C which impose an obligation on the respondents to pay $600 for other legal costs associated with the preparation of the deed of loan agreement and those words or words to that effect, are not in the standard form. 3. It therefore follows that the sublease is void to the extent that it contains these words in item C. 4. Section 43(5) of the Act relevantly provides that the terms contained in a prescribed standard form of village contract are not to be varied by the parties to a village contract for which the form is prescribed, and, to the extent that they are so varied, are taken not to have been varied. 5. The terms contained in the prescribed standard form of village contract in the sublease have been varied by the deed of loan agreement, in particular clause 12 of that deed, because those terms do not impose any obligation on a resident to pay a promoter's legal costs associated with preparation of such a loan agreement. We therefore find by reason of s 43 (5) that to the extent that those terms are so varied, they are taken not to have been varied. Is the Loan Agreement a village contract 1. The Act's definition of "village contract", "residence contract" and "residence right", s 24 of the Act and the following documents are relevant to this question: the loan agreement (pars 1.1 and 12.2), the sublease (par 54.1) and the disclosure statement. 2. The definitions are set out in pars 15, 16 and 17 above. 3. Section 24 of the Act relevantly provides: (1) The operator of a retirement village must not permit a prospective resident of the village to occupy residential premises in the village before the prospective resident enters into at least one of the following contracts with the operator in writing: (a) a residence contract, (b) a service contract. Maximum penalty: 50 penalty units. Note : A residence contract, a service contract and any other village contract may be contained in a single document. 1. Paragraphs 1.1 and 12.2 of the loan agreement are set out in pars 35 and 36 above. 2. Paragraph 54.1 of the sublease is in the following terms: 54 COLLATERAL DOCUMENTS 54.1 The Operator and the Resident acknowledge and agree that this Contract is collateral to and interdependent with the following documents entered into on the date hereof: (a) Services and Facilities Agreement between the Operator and the Resident; (b) Loan Agreement of even date herewith between the Operator and the Resident. And it is agreed that default under any one or more of the collateral documents shall be default under this Contract. 1. The disclosure statement is annexure A to the sublease. On page 1 of that document it is stated that: This disclosure statement is required to be given to you at least 14 days before you enter into a village contract. It contains important information about this village. 1. On page 2 of that statement the following appears: 1.VILLAGE CONTRACTS To become a resident you will need to enter into: (tick those applicable) a village contract a contract for sale of the premises other: A Services & Facilities Agreement and Loan Agreement. 1. There is box opposite each of these entries and the box opposite "village contract", has been ticked as has the box opposite "other: A Services & Facility Agreement and Loan Agreement". 2. In our view, the sublease and the loan agreement taken with the fact that the appellant was the operator of the retirement village, show that the contract which existed between the parties was to the effect that if the respondents made the loan to the appellant and paid the $600, the appellant would sign the sublease and have it registered. That would result in the respondents having a right to occupy the unit in the retirement village. 3. In other words the loan agreement gave rise to the respondents having the right to occupy residential premises in a retirement village, being a right arising from a contract. 4. A contract which gives rise to a residence right is a contract which gives rise to the person's right to occupy residential premises in a retirement village, being a right arising from a contract. 5. The conclusion to be drawn from the evidence and in particular the loan agreement (especially clause 12.2) and the sublease (especially par 54.1) is that unless the respondents entered into the loan agreement, the appellant would not have signed the sublease. 6. For the reasons set out above we find that the loan agreement was a village contract within the meaning of the Act because it was a residence contract. It was a residence contract because it was a contract that gave rise to a residence right. Regulation 13 1. The question which needs to be answered is whether reg 13 limits the amount payable by the respondents for legal expenses incurred by the appellant for the preparation of the sublease and the loan agreement to two hundred dollars. 2. The answer to that question depends upon the meaning of the words "in connection with" in reg 13. The case law on the phase "in connection with" indicates that it is an expression of wide connotation that merely requires a relation between one thing and another (Minister for Immigration and Multicultural Affairs v Singh (2000) 98 FCR 469 at [28]). 3. One of the very generally accepted meanings of "connection" has been said to be relation between things one of which is bound up with or involved in another (Re. Nanaimo Community Hotel Limited [1945] 3DLR 225, referred to be Wilcox J in Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 at 480). 4. The words "connected with" have been said to be capable of describing a spectrum of relationships ranging from the direct and immediate to the tenuous and remote. The meaning of the word "connection" has been said to be wide and imprecise and one of its common meanings being "relation between things one of which is bound up with or involved in another" (Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 288). 5. In R v Orcher (1999) 48 NSWLR 273 at [32], Spigelman CJ quoted the following passage from Health Insurance Commission v Freeman (1998) 158 ALR 267 at 273 – "However as pointed out by Sackville J in Taciak v Commissioner of Australian Federal Police (1995) 59 FCR 285 at 295, the question that remains in a particular case is what kind of relationship will suffice to establish the connection contemplated by the statute. That requires "a value judgment about the range of the statute": See Pozzolanic (at 289)." 6. The relationship between one thing and another which is encompassed by the phase "in connection with" depends so much upon the statutory context in which the words appear (Minister for Immigration and Multicultural Affairs v Singh at page 469 at [29]). 7. The statutory context here includes ss 31 and 43 of the Act and regs 13 and 15A which indicate an intention to restrict the wording of a village contract to a prescribed form and to ensure that there is a limit on the amount that a resident can be obliged to pay to an operator for the operator's legal and other expenses. 8. In our view there is a relation (emphasis added) between the legal expenses incurred by the appellant for preparation of the loan agreement and the legal expenses incurred for preparation of the sublease. Both those expenses were incurred in order for the appellant to grant the sublease to the respondents. 9. We are also of the view that the legal expenses incurred by the appellant for the preparation of the loan agreement, have to do (emphasis added) with the legal expenses incurred by the appellant for the sublease because they were incurred in order for the appellant to grant the sublease to the respondents. 10. We are of the view that there was a relation (emphasis added) between the legal expenses incurred by the appellant for the preparation of the loan agreement and the legal expenses incurred by the appellant for the preparation for the sublease as those two documents were bound up with each other (emphasis added). They were bound up with each other because they were prepared for the purpose of the appellant granting the sublease to the respondents. 11. We are therefore of the view that the legal expenses incurred by the appellant in connection with the preparation of the sublease included the legal expenses incurred by the appellant for the preparation of the loan agreement. 12. We therefore find that the maximum amount payable by the respondents for legal expenses incurred by the appellant for the preparation of the sublease and the loan agreement was two hundred dollars. For the above reasons we are of the opinion that the appeal should be dismissed. Costs 1. The appellant sought orders that the respondents pay the costs of the appeal and of the application heard by the Tribunal member. The general costs rule is that each party is to pay their own costs (s 60(1) of the CAT Act). This is not a case in which there are special circumstances and costs may be ordered under s 60(2). The appellant has been wholly unsuccessful in its appeal. For these reasons there is no basis for an order for costs in the appellant's favour and the application for costs is dismissed. Order 1. Accordingly the Appeal Panel orders: 1. The appeal is dismissed. ********** 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 Amendments 01 December 2015 - 1. What was paragraphs 35 and 36 - changed to 34 A and 34 B. 2. What was paragraph 51 - changed to form part of paragraph 48. 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: 01 December 2015