Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Hogan v Trustees of Catholic Aged Care Sydney [2016] NSWCATAP 188 Hearing dates: 29 January 2016 Date of orders: 24 August 2016 Decision date: 24 August 2016 Jurisdiction: Appeal Panel Before: P Durack SC, Senior Member Dr J Lucy, Senior Member Decision: 1 Appeal allowed in part. 2 Direct that, within 14 days of the date of this decision, the Respondent is to notify the Appeal Unit of the Tribunal whether or not it objects to the making of Order 1 sought by the Appellant in these proceedings and, if so, whether it wishes to be heard on the question. 3 The case of the Appellant (the Applicant below) regarding order 6 sought in the Tribunal at first instance is remitted to the Tribunal for determination. 4 The Tribunal's order that the Appellant (the Applicant below) is to pay the costs of the Respondent in the sum of $5,000.00 is set aside. 5 The Respondent's application for costs in the proceedings below is remitted to the Tribunal below for redetermination, having regard to the outcome of this appeal and the outcome of the matter remitted to the Tribunal under Order 3. 6 Direct that, if either party wishes to apply for costs of the appeal, that party is to provide to the Appeal Unit of the Tribunal and the other party written submissions on the question of costs of the appeal, within 14 days of the date of this decision. If such submissions are made, the other party has a further 14 days to provide submissions on the question of costs of the appeal to the Appeal Unit of the Tribunal and the party making the costs application. 7 The appeal is otherwise dismissed. Catchwords: APPEAL – Retirement villages – Financial management- Residents' deemed consent to proposed annual budget - Whether deemed consent provision applies where operator proposes to amend approved annual budget – Deemed consent provision does not apply - Increase in administration expenses – Whether operator contractually obliged to have discussion with residents before relying upon deemed consent – No such contractual obligation – Failure to consider parts of claim – denial of procedural fairness. Legislation Cited: Retirement Villages Act 1999 (NSW) Retirement Villages Amendment Act 2004 (NSW) Retirement Villages Amendment Act 2008 (NSW) Interpretation Act 1987 (NSW) Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) Retirement Villages Regulation 2009 (NSW) Cases Cited: Austral Monsoon Industries Pty Ltd v Pittwater Council [2009] NSWCA 154 Dranichnikov v Minister for Immigration & Multicultural Affairs (2003) 77 ALJR 1088; [2003] HCA 26 Hunter v Transport Accident Commission [2005] VSCA 1; 43 MVR 130 Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 113 McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633 Mills v Meeking (1990) 169 CLR 214 Murphy v Farmer (1988) 165 CLR 19 Plaintiff M61/2010E v Commonwealth (2010) 243 CLR 319; 85 ALJR 133; [2010] HCA 41 Wainohu v New South Wales (2011) 243 CLR 181 Wentworth Securities Ltd v Jones [1980] AC 74 Category: Principal judgment Parties: Alan Eugene Hogan (Appellant) Trustees of Catholic Aged Care Sydney (Respondent) Representation: Self–representation (Appellant) Counsel: Mr P Bambagiotti (Respondent) Solicitors: Makinson d'Apice Lawyers (Respondent) File Number(s): AP 15/64652 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 15 September 2015 Before: G Meadows, Senior Member File Number(s): RV 14/47809 reasons for decision Overview 1. This appeal concerns aspects of the financial management of a retirement village in Sydney. In May 2013, the Respondent, the operator of the village, proposed and then spent administration costs vastly in excess of past expenses of this category. The increase was first proposed in an amendment to the existing, approved budget for the financial year ended 30 June 2013 and in a proposed budget for the financial year ended 30 June 2014. 2. The appellant, Mr Alan Hogan, is a resident of the retirement village. He is also the chairman of the residents committee for the village. He commenced proceedings in the Tribunal against the operator of the village in September 2014 with the approval of the residents committee and the majority of residents. In effect, he sought to have the new expense disallowed and the amount of it recouped for the benefit of the residents. 3. Mr Hogan sought relief under the Retirement Villages Act 1999 (NSW) (the Act). He did so in circumstances where the increased administration expense did not lead to any proposed increase to the recurrent charges payable by the residents under their contracts. It did not do so because the village had a surplus of funds. This occurred because a portion of the funds derived by the operator from the existing level of recurrent charges was no longer needed for a capital works reserve fund. However, the surplus which became available was not returned to the residents and the prospect of future surpluses did not lead to a reduction in the recurrent charges. Instead, the administration expense was increased and no surpluses resulted. 4. The problem for Mr Hogan was that in this area of the financial management of retirement villages the focus of both the Act and the village contract is, largely, on the regulation of expenditure where there is a proposed increase in recurrent charges. 5. The whole of his claim was dismissed by the Tribunal at first instance. Mr Hogan was ordered to pay $5,000 in costs. By consent of the parties, this was a decision that was made on the papers rather than following an oral hearing: see s 50(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). 6. Mr Hogan raises a number of grounds of appeal, all of which are said to raise questions of law. He does not seek leave to appeal. 7. For the reasons set out below, in our opinion, there was appealable error by the Tribunal in respect of parts of Mr Hogan's claim. We conclude that: 1. The Tribunal erred in rejecting Mr Hogan's claim that the increased administration expense in the financial year ended 30 June 2013 was unauthorised. 2. The Tribunal erred by not considering Mr Hogan's claim that the operator did not comply with the village contract in respect of the increase in administration expenses in the 2014 and 2015 financial years with the claimed result that these increases were also unauthorised. 3. The Tribunal erred by not considering Mr Hogan's claim that audited accounts for the village in the 2013 and 2014 financial years should be supplied to the residents setting out the details of all of the income and expenditure of the village in those years. 1. As a result, we have upheld part of Mr Hogan's appeal. We have decided to make various consequential orders as a result of the partial success of his appeal. Background facts 1. The background facts to the change in the administration expense are uncontroversial. Over a number of years to 30 June 2012, the budgets for the village and, hence, the recurrent charges paid by the residents, were designed to achieve an excess of income over expenditure. This was done for two reasons. First, to ensure there would be no deficit. Secondly, the objective was to build up a capital works fund. As to the latter, s 99 of the Act provides for the taking of such a step. 2. On 12 August 2012, the auditor for the operator notified the management advisory committee of the village that the capital works fund, which had accumulated to the amount of approximately $250,000, no longer needed annual augmentation and the residents could have the surplus of income over expenditure for the previous year distributed to them. 3. On 2 November 2012, at a general meeting, the residents voted to distribute the surplus income for the financial year ended 30 June 2012. The surplus was subsequently distributed to residents in equal shares, leaving a balance of about $200,000 in the capital works fund. Such a step is provided for in s 120B(1)(b) of the Act. 4. The residents approved a budget for the 2013 financial year on 31 March 2012. That budget included an administration expense of $3,602. If that budget had been achieved there would have been a profit of $28,810 in the 2013 financial year and there would have been more surplus funds available for distribution to residents. 5. On 1 May 2013, at a general meeting of the residents, the respondent operator presented an amended budget for the 2013 financial year and a proposed budget for the 2014 financial year. This occurred without prior notice. Full discussion about it was refused. 6. The amended 2013 budget increased administration expenses from $3,602 to $25,000. The 2014 budget also showed administration expenses of $25,000. The residents did not consent to the amended 2013 budget or to the 2014 budget. The relief claimed by Mr Hogan 1. The orders sought by Mr Hogan in the proceedings in the Tribunal against the operator were that the operator: 1. repay to the capital works fund the sum of $21,398 for the year ended 30 June 2013 (Order 1); 2. submit the 2014 and 2015 budgets, and any future budget, to the residents for discussion, review and approval by the residents (Order 2); 3. repay any money expended in excess of $3,602 per year (being the original administration fee for the 2013 financial year) for the 2014 and 2015 financial years (Order 3); 4. be restrained from increasing in the 2015 or any subsequent budgets any items of expenditure or monthly contributions by changes in the consumer price index (Order 4); and 5. be directed to invest the money in the capital works fund on the best terms available from a bank, instead of with the Catholic Development Fund (Order 5). 1. The relief sought by Mr Hogan in respect of Order 5 was resolved by agreement between the parties. 2. After the proceedings were commenced, the 2015 budget was presented by the operator to the residents at a general meeting. The residents objected to the budget through correspondence sent to the operator by Mr Hogan in May 2015. 3. On 1 April 2015, Mr Hogan was given leave to amend his application to include an order (Order 6) that the operator provide to the residents audited accounts for the village for the financial years ended 30 June 2013 and 30 June 2014, such accounts to include details of all income and expenditure of the village for each of the relevant years. 4. Mr Hogan relied upon s 122(1) and s 128 of the Act in bringing his claim before the Tribunal and for the relief that he sought. Section 128(1) confers power on the Tribunal to make a range of orders in a dispute between a resident and an operator. Reconstitution of the Appeal Panel 1. The appeal was heard by Principal Member Redfern and Senior Member Lucy in January this year. 2. Principal Member Redfern subsequently resigned from the Tribunal as a result of her appointment as a Deputy President of the Administrative Appeals Tribunal. On 19 April 2016, a letter was sent to the parties advising them of the proposed reconstitution of Appeal Panel to Senior Member Durack SC and Senior Member Lucy, and asking them if they had any objection to this. The parties did not object. Financial management under the Act - Divisions 5 and 6 of Part 7 of the Act 1. It is convenient to now outline those parts of the Act that are central to the issues on the appeal. 2. Section 112 contains provisions relating to a "proposed annual budget". Important parts are : 112 Proposed annual budget (1) At least 60 days before the commencement of each financial year of a retirement village, or such other time as may be prescribed by the regulations, the operator of the village must supply each resident of the village with a proposed annual budget itemising the way in which the operator proposes to expend the money to be received by way of recurrent charges from the residents of the village during the financial year. Maximum penalty: 100 penalty units. (4) The budget is to be accompanied by a notice: (a) stating that the operator of the village is required to obtain the consent of the residents before expending the money as itemised in the budget, and (b) stating further that, if the residents do not give their consent, the operator may expend the money in accordance with an order of the Tribunal, and (c) briefly explaining the reasons for any changes in expenditure from the previous financial year, and (d) stating that if any change in expenditure arises from a variation in the services or facilities provided at the village by the operator, consent to that variation must be by way of a special resolution of the residents, and (e) containing such other information as may be prescribed. (5) The notice may (but need not) further state that the notice operates as the operator's formal request for the consent of the residents to the expenditure of the money as itemised in the budget. (6) Nothing in this section prevents an operator of a retirement village from cancelling a proposed annual budget and replacing it with an amended budget at any time. 1. Section 114 sets out the process for approval of the expenditure contained in the proposed annual budget. Importantly, s 114(8), which was inserted into the Act by the Retirement Villages Amendment Act 2008 (NSW), provides that residents are taken to have consented to the proposed budget if recurrent charges have not been varied or if they have been varied in accordance with ss 104(1)(a) or 105A. 2. There is no dispute that the recurrent charges remained the same for each of the 2013, 2014 and 2015 financial years. 3. Section 114 includes: 114 Residents' consent to expenditure (1) The operator of a retirement village must (whether by way of a notice referred to in section 112 or otherwise) seek the consent of the residents of the village to the expenditure itemised in the proposed annual budget. Maximum penalty: 100 penalty units…….. (4) The residents concerned must, within 30 days after receiving a request for consent to a proposed annual budget (or an amended budget): (a) meet, consider and vote on the budget, and (b) advise the operator that they consent, or do not consent (as the case may be) to the budget, and (c) if they do not consent to the budget-specify the item or items in the budget to which they object. (5) If the operator is not advised as required by subsection (4) (b), the residents are taken to have refused consent to the budget. (6) If the operator fails to seek the consent of the residents, the residents are taken to have refused consent to the budget…… (8) Subsections (1)-(6) do not apply, and the residents are taken to have consented to the proposed annual budget, if the recurrent charges payable by the residents: (a) have not been varied, or (b) have been varied in accordance with section 104 (1) (a) or 105A. 1. We note that s 114(4) relevantly refers to a "proposed annual budget (or an amended budget)". The operator contends, and Mr Hogan disputes, that this must include a reference to an "amended approved annual budget". Rather, so Mr Hogan contends, this is a reference back to the amended proposed annual budget referred to in s 112(6), referred to above. 2. Section 116 prohibits the expenditure of recurrent charges received except in the circumstances described. It provides: 116 Expenditure to be in accordance with approved annual budget (1) A proposed annual budget is taken to be an approved annual budget if: (a) the residents of a retirement village consent to expenditure in accordance with the proposed annual budget, or (b) the Tribunal orders that the expenditure of the operator is to be as itemised in the proposed annual budget. (2) However, if the Tribunal makes any other order in relation to the proposed annual budget, the approved annual budget is taken to be that budget modified to accord with the order. (3) The operator must not expend money received by way of recurrent charges otherwise than in accordance (apart from minor variations) with the approved annual budget or any amendment authorised under section 117. Maximum penalty: 100 penalty units. (3A) An operator does not contravene subsection (3) if the expenditure that was otherwise than in accordance with the budget: (a) was a variation in expenditure between items in the approved annual budget, and (b) does not reduce the level of services provided by the retirement village, and (c) does not cause the total expenditure provided for by the approved annual budget to be exceeded. (4) If the operator: (a) contravenes subsection (3), or (b) did not (despite any order of the Tribunal under section 113) supply a proposed annual budget in respect of a current financial year, a resident may apply to the Tribunal for (and the Tribunal may make) an order directing the operator to refund the recurrent charges paid by the resident during so much of the financial year as has passed at the time the order is made. 1. Mr Hogan did not seek an order for a refund of the recurrent charges under s 116(4). 2. Section 117 concerns amendment of an approved budget and provides: 117 Amendment of approved annual budget (1) The operator of a retirement village may seek the consent of the residents to amend an approved annual budget except if: (a) the budget is taken to be an approved annual budget because of section 116 (1) (b), or (b) the budget is a proposed annual budget modified in accordance with an order of the Tribunal as referred to in section 116 (2). (2) If the residents consent to the amendment, the operator is authorised to expend money in accordance with the approved annual budget as amended. (3) If the residents do not consent to the amendment, the operator may apply to the Tribunal for an order approving the amendment. If the Tribunal makes such an order, the operator is authorised to expend money in accordance with the approved annual budget as amended. (4) In the case of an amendment that relates to further expenditure, the Tribunal is not to make an order under subsection (3) unless the Tribunal is satisfied that: (a) there is an urgent need for the further expenditure, and (b) the further expenditure was not reasonably foreseeable when the proposed annual budget was approved under section 116. 1. The critical issue for determination at first instance in respect of Order 1 (concerning the 2013 expenditure) was whether the deeming provision for the consent of the residents in s 114(8) applied to an amended approved annual budget under s 117. 2. As to the provision of audited accounts to residents, s 119(2) provides in part: (2) The audited accounts must include (but are not limited to): (a) the following particulars: (i) details of the income and expenditure of the village during the financial year, including income and expenditure of the capital works fund (if any), (ii) details of the balance of the capital works fund (if any), Decision of the Tribunal at first instance on the substantive claim 1. The Tribunal rejected proposed order 1 for the reasons explained at paragraphs [38] to [45] of its decision as follows: 38 The applicant concedes that there was, as a matter of fact, no increase in recurrent charges. 39 In my opinion, s 114(4) applies, on its face, to a proposed annual budget or an amended budget, whether that amended budget is an amended proposed budget or an amended approved budget. The purpose of the section, interpreted in accordance with the purpose of the Act as a whole, is to provide for the protection of the parties and of the residents particularly in relation to potential increases in the charges to be levied on them for living in the scheme, and in accordance with that purpose the section makes sense if applied to both proposed and approved budgets. 40 The wording of s 114(8) includes by implication an amended budget, because it refers to sub secs 114(1) to (6), with the reference to an amended budget in s 114(4). 41 I do not accept the applicant's submission that there was an effective increase in recurrent charges. The concept of "recurrent charge", although defined in s 3 of the RV Act in very general terms, is given particular meaning in the various agreements signed by the residents. In this case, only the agreement signed by the applicant and Jill Frances Hogan is in evidence, and in that agreement "recurrent charge" means the amount referred to in Item 4 of the Schedule to the Agreement ($255.00 per month at the date of the Agreement and subject to the provisions of Clause 7 of the Agreement) which, in my opinion, is not contrary to the definition in the RV Act. 42 I accept the submission of the respondent to the effect that there must be maintained a distinction between any distribution of surplus to the residents on the one hand, and recurrent charges on the other. Although there may be no surplus to be distributed in one year while in another there may be such a distribution, if recurrent charges have not actually increased, there is no change from one such year to the other. 43 Accepting that there has been no increase in recurrent charges I find the applicant has not proved his case, on the balance of probabilities, that he is entitled to Order 1 being made. 1. Proposed orders 2 and 3 were rejected for the following reasons: 44 On the basis of the evidence of the respondent, I find that the respondent already submits proposed budgets to the residents pursuant to the requirements of the RV Act and therefore the applicant is not entitled to Order 2. 45 I find the applicant has not proved the respondent has expended funds in excess of approved budgets, and therefore the applicant is not entitled to Order 3. 1. Proposed order 4 was refused for the following reasons at [46]: 46 I find that the applicant has not proved any history (in relation to past budgets) nor any intention in relation to future budgets, that the respondent has or will increase any budget except in compliance with the terms of residents' agreements and the RV Act. (I consider I am not able to make any order restraining future increases in any case, depending on the factual situation which may apply in future and which may change.) Therefore I find the applicant is not entitled to Order 4. 1. The Tribunal did not consider proposed order 6 because it concluded at [48], incorrectly, that Mr Hogan was not given leave to amend his application to include this claim. Grounds of appeal 1. Mr Hogan's grounds of appeal, as set out in the notice of appeal and expanded in his written submissions, can be summarised as follows: 1. In respect of the expenditure for 2013, the Tribunal erred in law: 1. in failing to consider and rule on his argument that s 117 applied to the 2013 budget because it was an approved annual budget under s 116(1)(a) (Ground 1); 2. in finding that ss 114(4) and (8) applied to an approved annual budget (Ground 2); and 3. in failing to rule that the 2013 budget was an approved annual budget within s 116(1)(a) to which s 117 applied and that s 117 had not been complied with, so that the purported amendment of the 2013 budget was of no effect (Ground 3). 1. In respect of the 2014 and 2015 budgets, the Tribunal erred in law: 1. in failing to consider and rule on the submission that the operator was in breach of the promise contained in the village contracts and disclosure statements to allow the residents to discuss, review and approve the 2014 and 2015 budgets (Ground 4); and 2. in failing to find that the operator was in breach of the promise in the village contracts and disclosure statements because it did not allow the residents to discuss, review and approve the 2014 and 2015 budgets and that the provision to increase the expenditure for administration fees from $3,602 to $25,000 was thereby void and of no effect (Ground 5). 1. The Tribunal erred in law in failing to find that Mr Hogan had not proved a history of the operator increasing the budget otherwise than in compliance with the village contracts and the Act (Ground 6). This ground was not pressed in the appeal but is included for completeness. 2. In respect of the provision of accounts sought under order 6, the Tribunal erred in law: 1. in failing to consider and rule on the orders sought (Ground 7); and 2. in failing to find that the audited accounts did not comply with s 119(2)(a)(i) of the Act (Ground 8). (Order 1) Ground 1: Failure to consider submission re s 117 1. Ground 1 of the appeal is that the Tribunal erred in failing to consider or rule upon Mr Hogan's submission that s 117 of the Act applied to the 2013 budget because it was an amended annual budget within the meaning of s 116(3) of the Act. Mr Hogan points out that the Tribunal makes no reference to s 117 in its reasons where they deal with the s 114(8) issue, and that although the Tribunal refers to his submission about s 117, it then makes no further reference to that submission. 2. As Mr Hogan acknowledges, the Tribunal referred to Mr Hogan's submission concerning the application of s 117 to the 2013 budget at paragraphs 21 and 31 of its reasons. It also referred to the operator's submission to the contrary at paragraph 26 of its reasons. The Tribunal determined this issue at paragraphs 39 and 40 of its reasons. Although it did not specifically mention s 117, it is implicit that it rejected Mr Hogan's argument that the amendment of the 2013 budget is governed only by s 117, because it found that s 114(8) applied to a proposal to amend an approved budget (and thus to the 2013 budget). 3. Ground 1 is therefore rejected. (Order 1) Did the Tribunal err in its construction of s114 (4) and (8) of the Act (Grounds 2 and 3)? 1. Both these grounds relate to the 2013 amended budget. 2. As to the construction of s 114, the Tribunal reasoned as follows: 1. subs 114(4) applies on its face to a proposed annual budget or an amended budget, whether that amended budget is an amended proposed budget or an amended approved budget (reasons [39]); 2. the purpose of s 114 is to provide for the protection of residents, particularly in relation to potential increases in the charges to be levied on them for living in the scheme (reasons [39]); 3. the wording of s 114(8) includes by implication an amended approved budget, because it refers to subsections 114(1) to (6), which includes a reference to an amended budget in s 114(4) (reasons [40]). Parties' submissions 1. As indicated earlier, s 114(4) provides a mechanism to determine whether residents consent to an operator's request "for consent to a proposed annual budget (or an amended budget)". An "amended budget" is not defined in the Act. Mr Hogan contends that the words "amended budget" in s 114(4) refer to "an amended proposed annual budget." By this he must mean that "amended budget" in s 114(4) refers to an amended proposal for an annual budget, in circumstances where no approved annual budget has been made for the relevant year. That is, on Mr Hogan's construction, the words "amended budget" do not refer to a proposal to amend an approved annual budget. The amendment of approved annual budgets is dealt with exclusively by s 117, in Mr Hogan's view. 2. Mr Hogan refers, in support of his submission about the meaning of s 114(4), to s 112(6), a provision which also uses the term "amended budget." That subsection provides that nothing in s 112 "prevents an operator of a retirement village from cancelling a proposed annual budget and replacing it with an amended budget at any time." It is clear, from the context that the term "amended budget" in s 112(6) refers to an amended proposal for an annual budget before a budget has been approved. The term "amended budget" is not used elsewhere in the Act. 3. The operator's submission is that the words "amended budget" in s 114(4) indicate that "the legislature contemplated that the mechanisms in sec 114 would be available to deal with a proposal for amendment" (Submissions filed 18 December 2015 at [15]). This is supported, they say, by the consideration that s 117, which provides for an operator to seek the residents' consent to amend an approved annual budget, "does not provide the infrastructure for that consent to be obtained" (Submissions filed 18 December 2015 at [15]). 4. Mr Hogan's next contention is that the reference in subs 114(8) to a "proposed annual budget" does not include by implication an amendment to an approved annual budget, and the Tribunal erred in holding that it did (see his submissions of 24 November 2015 at [16]). 5. It may be accepted that a proposed amended approved annual budget is not a "proposed annual budget" within the s 4(1) definition of that phrase, as such a budget is not referred to in s 112. 6. "Proposed annual budget" is defined in s4(1) as : Proposed annual budget means a proposed annual budget referred to in section 112. 1. Mr Hogan submits that there are a number of indications in the Act that the words "proposed annual budget" in s 114(8) do not include a proposed amended approved annual budget. In his submission, s 117 sets out the only method in the Act whereby an operator may amend a budget once it has become an approved annual budget and this is by seeking the residents' consent (see s 117(1)). He says that s 116(3) confirms that s 117 is the provision under which consent to an amended budget must be sought and (if given) obtained, because it prohibits the expenditure of monies otherwise than in accordance with the approved annual budget or any amendment authorised under s 117 (emphasis added). 2. The operator supports the construction given to s 114(8) by the Tribunal and says that it is a deeming provision which applies in respect of a proposal to amend an approved annual budget. It submits that the words "or proposed amended budget" should be read into s 114(8) after the words "proposed annual budget" or, alternatively, that the term "proposed annual budget," where it appears in s 114(8), should be read as including a proposed amended budget. The operator submits that its construction of s 114(8) is a "purposive and facilitative construction" and should be preferred (submissions at [18]). Consideration 1. As a general rule the same meaning should be given to the same word or expression wherever it occurs in a statute (see, for example, McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633, Gibbs J at 643), although this presumption is not given a lot of weight (see, for example, Murphy v Farmer (1988) 165 CLR 19, Deane, Dawson and Gaudron JJ at 27). There is a presumption, then, that the term "amended budget" in s 114(8) means an amended proposal for an annual budget, as is referred to in s 112, which may yield to the requirements of the context. 2. In terms of Mr Hogan's next point concerning s 114(8), referred to in paragraph 46, his construction is supported by the plain meaning of the text. The respondent's construction requires the Tribunal either to read words into the provision, or to construe the term "proposed annual budget" in s 114(8) otherwise than in accordance with the definition of that term in the Act. 3. The conditions which must be fulfilled before words may be read into an Act were set out by Lord Diplock in Wentworth Securities Ltd v Jones [1980] AC 74 at 105–106 (referring to conditions which were fulfilled in a previous case): First, it was possible to determine from a consideration of the provisions of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy; secondly, it was apparent that the draftsman and Parliament had by inadvertence overlooked, and so omitted to deal with, an eventuality that required to be dealt with if the purpose of the Act was to be achieved; and thirdly, it was possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law. Unless this third condition is fulfilled any attempt by a court of justice to repair the omission in the Act cannot be justified as an exercise of its jurisdiction to determine what is the meaning of a written law which Parliament has passed. 1. The above passage has been referred to with approval in a number of Australian cases, including Austral Monsoon Industries Pty Ltd v Pittwater Council [2009] NSWCA 154 at [68], Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 113 and 116 and Mills v Meeking (1990) 169 CLR 214 at 243–244. 2. The respondents' alternative submission requires the words "proposed annual budget" in s 114(8) to be read to include a proposed amended budget, which, in turn, must be taken to include a proposed amended approved budget. 3. It is necessary to examine the context of s 114, both within the Act as it stands at present, and in terms of its legislative history. 4. As to the latter, prior to 24 March 2004, the Act required operators to provide residents with a statement of expenditure rather than a budget (see s 112). Section 112(6) then provided: "Nothing in this section prevents an operator of a retirement village from cancelling a statement of proposed expenditure and replacing it with an amended statement at any time." 5. At this time, s 117 provided: 117 Amendment to statement of approved expenditure (1) The operator may seek the consent of the residents to an amendment to the statement of approved expenditure if unforeseen requirements for expenditure arise. (2) Sections 113 and 114 apply, with the necessary modifications, to and in respect of residents' consent to such an amendment in the same way as they apply to their consent to the statement of proposed expenditure. (3) If the residents consent to (or the Tribunal orders) an amendment (whether under this Division or under section 53), the operator does not contravene section 116 (3) by expending money in accordance with the statement of approved expenditure as amended. 1. Section 114, referred to in s 117(2), then provided for a mechanism to obtain the residents' consent to a statement of proposed expenditure. Section 114(4) then provided: (4) The residents concerned must, within 30 days after receiving a request for consent to a statement of proposed expenditure (or an amended statement): (a) meet, consider and vote on the statement, and (b) advise the operator that they consent, or do not consent (as the case may be) to the statement, and (c) if they do not consent to the statement—specify the item or items in the statement to which they object. 1. There was, at this time, no s 114(8) or equivalent. 2. Due to the operation of s 117(2), as it then stood, provision was made for the mechanisms in respect to obtaining residents' consent and for the circumstances in which consent was taken to have been refused. 3. The better construction of the words "or an amended statement" in s 114(4), as they appeared in the Act prior to 24 March 2004, is that they referred to an amended statement of proposed, not approved, expenditure, as in s 112(6). The words "amended statement" in s 114(4) picked up the earlier use of the term in s 112(6). The alternative construction, that they referred to a proposed amendment to a statement of approved expenditure, would give the words "amended statement" no work to do, since s 117(2) applied s 114(4), with necessary modifications, to and in respect of residents' consent to an amendment to the statement of approved expenditure. Further, it would be expected that, if s 114(4) was intended to apply to an amendment to the statement of approved expenditure, the legislature would have used that language, consistently with its use of language in s 117. 4. Following the enactment of the Retirement Villages Amendment Act 2004 (NSW), which was assented to on 24 March 2004, s 117 was amended to provide as follows: 117 Amendment of statement of approved expenditure (1) The operator may seek the consent of the residents to amend the statement of approved expenditure. (2) If the residents consent to the amendment, the operator is authorised to expend money in accordance with the amended statement of approved expenditure. (3) If the residents do not consent to the amendment, the operator may apply to the Tribunal for an order approving the amendment. If the Tribunal makes such an order, the operator is authorised to expend money in accordance with the amended statement of approved expenditure. (4) In the case of an amendment that relates to further expenditure, the Tribunal is not to make an order under subsection (3) unless the Tribunal is satisfied that: (a) there is an urgent need for the further expenditure, and (b) the further expenditure was not reasonably foreseeable when the statement of proposed expenditure was approved under section 116. 1. As can be seen, the former s 117(2), which applied s 114 to an amended statement of approved expenditure with necessary modifications, was repealed without being replaced by an equivalent provision. It is not clear why this occurred. The explanatory notes and second reading speech to the Retirement Villages Amendment Bill 2004 (see Hansard, Legislative Assembly 25 February 2004, Ms Reba Meagher) do not reveal an intention on the part of the legislature to change the mechanism for obtaining the residents' consent to amending a statement of approved expenditure. The mischief the amended s 117 was designed to address appears from the second reading speech to be that, prior to the amendment, operators could too easily obtain a change to proposed expenditure through a Tribunal order where residents did not consent to it. However, the effect of the repeal of the former s 117(2) was that the mechanisms in ss 113 and 114 no longer applied to and in respect of residents' consent to an amendment to the statement of approved expenditure. 2. Section 114 of the Act was amended for the first and only time by the Retirement Villages Amendment Act 2008, which added the existing s 114(8). This Act also changed the following terms in s 114 (and elsewhere): a "statement of proposed expenditure" became a "proposed annual budget", "the statement" became "the budget" and "amended statement" was replaced with "amended budget". Some minor amendments were also made to s 117. 3. The insertion of s 114(8) was part of a suite of amendments (including amendments to s 106 and the insertion of new ss 105A and 106A) aimed at "reducing red tape and removing unnecessary restrictions on business" (Agreement in Principle Speech to Retirement Villages Amendment Bill 2008 by Linda Burney, Hansard, Legislative Assembly, 26 June 2008). In Minister Burney's words, the amendments sought to reduce the "compliance burden" for operators. The changes included that "operators will no longer have to seek the consent of residents for increases in recurrent charges that are at or below the rate of inflation" (see Agreement in Principle Speech). There is nothing in the Agreement in Principle Speech or the explanatory notes to throw light upon the question whether s 114(8), providing for deemed consent to a budget, was intended to apply to an amended approved budget. However, the use of the term "proposed annual budget" in that provision would indicate that it was not. 4. It can be argued that no clear reason is apparent why the legislature would provide that residents are deemed to have consented to proposed annual budgets, where those budgets do not make any variation to recurrent charges, without providing that residents are deemed to have consented to an amended approved budget, in comparable circumstances. 5. That may be so, however, Division 5 of Part 7 of the Act does regulate the issue of expenditure in a proposed annual budget and an approved annual budget differently. More restrictive conditions are placed on the Tribunal's power to approve an increase in expenditure under a proposed amendment to an approved budget than is the case for a proposed annual budget that is not consented to by the residents; see s 117(4) compared with s 115. The change in proposed expenditure under an approved budget needs to be justified by urgency and a lack of foreseeability when the proposed annual budget was approved. These provisions would encourage spending discipline by encouraging accuracy for the expenditure figures in the proposed annual budget and, thereafter, restraint in spending. Such considerations would also justify the need to obtain actual, not deemed consent, for a change to the approved budget. 6. Be that as it may, the text of the legislation suggests that the legislature has, as a matter of fact, made such a distinction concerning consent of the residents. When adding s 114(8) to Division 5 it would have been a simple matter to have added the words "or to the proposed amended approved annual budget" (to adapt the wording in s 117(1)), after the words "proposed annual budget", had this been the intention. 7. As Mr Hogan pointed out, the words "any amendment authorised under s 117", in s 116(3), indicate that an amendment must be authorised under s 117. If s 114(8) were interpreted to provide deemed consent to a proposal to amend an approved annual budget, this would not strictly be an authorisation "under" s 117. 8. Turning to the conditions identified by Lord Diplock for reading words into an Act, it is not possible to identify with certainty the mischief to which s 114(8) is addressed unless this is done in a way reflecting the words of the section itself. Thus, the mischief could be said to be what was perceived to be (before the 2008 amendments) an unduly onerous procedure for obtaining consent to a proposed annual budget in circumstances where recurrent charges are not being increased substantially or unfairly. It cannot be said, with any certainty, that the "mischief" being addressed extends to amendments to approved budgets. 9. It may be, as the operator submits, that the draftsman by inadvertence overlooked the application of s 114(8) to an amended proposed annual budget, but we do not think that it is clear that he or she overlooked the application of s 114(8) to an amendment to an approved annual budget. Whilst the reference to the non-application of subsections 114(1) to (6), in the opening words of s 114(8), might indicate that s 114(8) was intended to apply to an "amended budget" as referred to in s 114(4), for the reasons given above, we do not accept that the term "amended budget" in s 114(4) includes a proposal to amend an approved annual budget. Once it is understood that s 114(4) applies to a revised proposal for an annual budget, rather than a proposed amendment to an approved annual budget, the operator's argument as to the extended construction of s 114(8) loses much of its force. 10. For these reasons, we do not accept the operator's contention that s 114(8) applies to provide for a deemed consent to a proposed amended approved annual budget, as well as to a proposed annual budget and to an amended proposed annual budget. We do not agree that the words "or the proposed amended budget" should be read into s 114(8), nor do we accept the operator's alternative case that the term "proposed amended budget" in that provision should be given a different meaning from that in the definition of the term. 11. Accordingly, we uphold Ground 2 of the appeal grounds. 12. It follows from the construction adopted above that the Tribunal erred in declining to make the first order sought by the applicant (that the respondent repay $21,398 to the capital works fund in respect of the 2013 budget), for the reasons it gave. Insofar as Ground 3 alleges that the Tribunal erred by finding that the purported amendment of the 2013 budget was effective, it is upheld. 13. The reasons of the Tribunal at first instance do not address the question of remedy in the event that Mr Hogan succeeded in establishing that the administration expenditure beyond the amount of $3,602 was prohibited. It would seem, however, that there is no controversy between the parties as to the remedy that should be ordered in the event that Mr Hogan succeeds on this point. In this respect, we note that under s 128(1)(e) of the Act the Tribunal can make an order for the payment of an amount of money. This would appear to authorise the making of the order sought, namely, that the operator pays $21,398 to the capital works fund (see also NCAT Act, s 81(2)). 14. In these circumstances, unless the Respondent notifies the Appeal Panel that it disagrees that this is the appropriate remedy and wishes to be heard on the point, we propose to make the order sought by Mr Hogan. If the Respondent does so notify, then we will invite written submissions on the issue. Depending upon the matters raised in any such submissions, we will either rule upon them ourselves or remit the issue to the Tribunal at first instance for a decision upon the issue of remedy. (Order 2) Grounds 4 and 5: alleged breach of promise to allow residents to discuss, review and approve 2014 and 2015 budgets 1. In contrast to the situation concerning the budget for the 2013 financial year, no amendment of a budget was involved in respect of the 2014 and 2015 financial years. In respect of each of these years, there is no dispute that the statutory provisions were complied with. Proposed annual budgets were provided to residents and the budgets were taken to have been consented to by virtue of the operation of s 114(8). 2. However, Mr Hogan submits that the village contracts counteracted or modified the operation of s 114(8). They did so, according to Mr Hogan, by requiring that budgets be approved by the residents or, at least, that there be discussion about them before they could be regarded as having the consent of the residents. He submits that, in effect, the contract prevented or placed a restriction upon there being a deemed consent by the operation of s 114(8). 3. It is relevant to note that Mr Hogan's claim in respect of the 2014 and 2015 years was directed at the recovery of what he said was unauthorised expenditure (the increased administration fee) and at the proper authorisation of expenditure in those years. He did not advance a case for a review of the recurrent charges in accordance with the village contract, including a review by way of reduction of such charges. 4. Mr Hogan contends that the Tribunal at first instance erred by failing to consider his breach of contract argument. 5. The Tribunal at first instance referred to the subject of Order 2 in paragraphs 22, 27 and 33 of its reasons. It did so without really capturing the essence of Mr Hogan's contention. 6. The Tribunal's reasons with respect to Order 2 were at paragraph 44 as follows: On the basis of the evidence of the respondent, I find that the respondent already submits proposed budgets to the residents pursuant to the requirements of the RV Act and therefore the applicant is not entitled to Order 2. 1. In our opinion, the Tribunal did not engage with Mr Hogan's argument. The reasons do not examine Mr Hogan's contention that the contract required the operator to do more than merely submit the budgets – his contention was that the budgets needed to be approved or, at least, discussed with the residents before they could be regarded as authorising the expenditure to which they referred. The reasons do not address the contractual basis for this contention and the relationship between the contract and s 114(8) of the Act. 2. Regardless of the merit of Mr Hogan's contention (which we deal with below), the issue raised by him with respect to Order 2 was a significant part of his case. In our opinion, the argument needed to be considered and dealt with and the failure to do so meant there was a breach of procedural fairness of the kind referred to in Plaintiff M61/2010E v Commonwealth (2010) 243 CLR 319; 85 ALJR 133; [2010] HCA 41 at [90] and in Dranichnikov v Minister for Immigration & Multicultural Affairs (2003) 77 ALJR 1088; [2003] HCA 26 at [24], [95]. 3. The merits of Mr Hogan's contention were fully argued at the hearing of the appeal. No issues of fact arise. We have examined the merits of it. For the reasons below, we think it should be rejected. 4. Our references below to provisions of the contract are to those contained in extracts from a village contract supplied by Mr Hogan to the Appeal Panel (extracts from a contract between the operator, Ms Fogarty and the Trustees of Our Lady's Nurses of the Poor, as Licensee). We note that the Tribunal at first instance makes reference to a different contract at [41]. However, it does not seem to us that anything turns on this. 5. Mr Hogan relied upon clause 7(d) of the village contract which stated : The Recurrent Charge will be reviewed either in accordance with Item 16 of the Schedule (at specified intervals in accordance with a fixed formula) or in accordance with Item 17 of the Schedule (at specified intervals otherwise than in accordance with a fixed formula). 1. "Recurrent Charge" was defined to mean the amount set out in Item 14. This item specified a charge in the amount of $345. 2. Item 16 was stated to be not applicable and so Item 17 applied. It stated: Reviewed annually at annual meeting in April. Result of discussions with residents concerning expenditure for the coming year, taking into account the predicted increase for the next 12 months. The increase to be divided by the number of units in the Facility, which as at the date of this Agreement is thirty one (31). 1. Clause 7(f) provided that in the event that the operator reviews the Recurrent Charge otherwise than in accordance with a fixed formula, the operator will……. : (ii) provide the Resident …..with at least sixty (60) days' prior written notice of the impending review. 1. Clause 7(g) provided that in the event that the operator reviews the Recurrent Charge otherwise than in accordance with a fixed formula: the Resident acknowledges that the amount of Recurrent Charges cannot be varied unless affected residents consent to the variation or the Tribunal orders the variation to take effect. 1. Regardless of any ambiguity created by the terms of Item 17, it is clear that these clauses are concerned with changing recurrent charges and not with authorising expenditure. None of these provisions speak about obtaining the consent of the residents to a budget or to items or totals of expenditure. None of these provisions proscribe incurring expenditure other than in accordance with the consent of the residents. 2. Three aspects of the reference to expenditure in Item 17 of the contract are pertinent. First, the expenditure is not specified to be the subject of a budget. Secondly, the expenditure is for discussion, not approval. Thirdly, the expenditure is in connection with a review of recurrent charges paid by residents, not simply a review of expenditure. 3. Accordingly, in our opinion: 1. It would not be a breach of contract to fail to provide a proposed budget setting out the expenditure to be discussed. 2. It would not be a breach of contract to fail to obtain the approval of the residents to the expenditure. 3. There would only be a breach of contract by failing to discuss expenditure where that was in the context of a review of recurrent charges. 1. Furthermore, we note that whatever may be the meaning of these contractual provisions relied upon by Mr Hogan, the Act applies to a retirement village despite the terms of any contract. This is so, whether the contract was made before or after the commencement of the amendment inserting s 114(8): see clause 16 of Schedule 4 of the Act. Accordingly, the approval of a proposed budget by virtue of the operation s 114(8) and the resultant authorisation of expenditure prevails and is unaffected by any pre-existing or subsequent contractual provision. 2. In our opinion, for the above reasons, Mr Hogan's particular claims in respect of the 2104 and 2105 budgets should not be accepted. That is not to provide a general endorsement of the actions of the operator in regard to the change in administration expense. We must, however, confine ourselves to the particular case that Mr Hogan has brought. (Order 6) Grounds 7 and 8: Failure to consider or rule upon proposed Order 6 and failure to rule that respondent did not comply with s 119(2)(a)(i) 1. Grounds 7 and 8 of the appeal grounds do not concern the above increase in administration expenses but, in part, they do concern an administration fee received by the operator. 2. Mr Hogan contends that the audited accounts for the 2013 and 2014 financial years supplied to the residents failed to comply with s 119(2)(a)(i) of the Act because they did not include "details of the income and expenditure of the village during the financial year….". 3. Mr Hogan raises a number of matters about these accounts, including that: 1. The accounts only relate to the capital works fund. 2. The accounts do not include as income the amounts charged by the operator on incoming contributions as an administration fee. 3. The accounts do not include income derived by the operator on deposits of the funds received as incoming contributions. 4. The accounts do not include all of the expenditure of the village, including the amounts spent on refurbishment of units when residents vacate the premises. 1. The operator submits that there is no evidence that the accounts do not comply. It also submits that a distinction needs to be drawn between the income and expenditure of the village and the income and expenditure of the operator. 2. The Tribunal below did not deal with this part of Mr Hogan's claim. As we have already mentioned, the Tribunal, incorrectly, regarded Mr Hogan as having been refused leave to amend to include this part of his claim. 3. Clearly, therefore, there has been an error of law by the Tribunal in failing to consider this claim. There has been a denial of procedural fairness of the kind we have already referred to above. 4. Matters relating to the merits of this claim were argued on the appeal. However, there are factual questions, as well as questions of law, to be determined about what is or is not an item of income or expense of the village and what has and has not been included in the accounts in this regard. Aspects of the village contracts may bear upon such factual questions. 5. None of these matters has been the subject of any findings of fact. 6. In the circumstances, we have decided that this aspect of the dispute must be remitted to the Tribunal at first instance for determination. This will also provide an opportunity for reasons to be given on all points of law arising from the factual questions. Costs order 1. Mr Hogan seeks an order setting aside the Tribunal's order for costs. 2. As a result of this appeal, this order must now be made. This is because Mr Hogan has now had a measure of success on his claim, whereas the order for costs in favour of the Respondent was based upon the failure of the whole of his claim. 3. The parties will be given the opportunity to make submissions about costs of the appeal. So far as the costs of the proceedings at first instance are concerned, that question should be remitted to the Tribunal at first instance for determination in the light of the outcome of this appeal and the outcome of the matter concerning Order 6 now remitted to the Tribunal. Orders made on appeal 1. For the reasons given above, we make the following orders: 1. Appeal allowed in part. 2. Direct that, within 14 days of the date of this decision, the Respondent is to notify the Appeal Unit of the Tribunal whether or not it objects to the making of Order 1 sought by the Appellant in these proceedings and, if so, whether it wishes to be heard on the question. 3. The case of the Appellant (the Applicant below) regarding order 6 sought in the Tribunal at first instance is remitted to the Tribunal for determination. 4. The Tribunal's order that the Appellant (the Applicant below) is to pay the costs of the Respondent in the sum of $5,000.00 is set aside. 5. The Respondent's application for costs in the proceedings below is remitted to the Tribunal for redetermination, having regard to the outcome of this appeal and the outcome of the matter remitted to the Tribunal under Order (3). 6. Direct that, if either party wishes to apply for costs of the appeal, that party is to provide to the Appeal Unit of the Tribunal written submissions on the question of costs of the appeal, within 14 days of the date of this decision. If such submissions are made, the other party has a further 14 days to provide submissions on the question of costs of the appeal to the Appeal Unit of the Tribunal and the party making the costs application. 7. The appeal is otherwise 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 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: 24 August 2016