Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Eager v North Sydney Retirement Trust [2018] NSWCATAP 50 Hearing dates: 18 August 2017 Date of orders: 28 February 2018 Decision date: 28 February 2018 Jurisdiction: Appeal Panel Before: P Durack SC, Senior Member A Boxall, Senior member Decision: In AP 16/55362 (the substantive appeal): 1. Grant leave to appeal against the dismissal of the claim for Order 2 in the application on Ground 4 of the grounds of appeal set out under item B of the attachment to the Notice of Appeal and on the ground of new evidence concerning alleged deferred management fees earnt by the respondent 2. Leave to appeal is refused on all other grounds of appeal. 3. Allow the appeal on the grounds referred to in Order 1. 4. Order 1 of the orders made by the Tribunal on 14 November 2016 be set aside but only in so far as it dismissed the claim for Order 2 in the application based upon the alleged failure of the audited accounts for the year ended 30 June 2015 to comply with s 119 (2) (a) (i) and (iv) of the Retirement Villages Act 1999. 5. The respondent's notice of motion dated 19 September 2016 is dismissed in so far as it sought dismissal pursuant to s 55 (1) of the Civil and Administrative Tribunal Act 2013 of the appellant's claim for Order 2 in the application based upon the alleged failure of the audited accounts for the year ended 30 June 2015 to comply with s 119 (2) (a) (i) and (iv) of the Retirement Villages Act 1999. 6. The appellant's claim for Order 2 based upon the alleged failure of the audited accounts for the year ended 30 June 2015 to comply with s 119 (2) (a) (i) and (iv) of the Retirement Villages Act 1999 is to be reconsidered by the Tribunal and the Tribunal is to fix a date for the making of directions for the future conduct of that claim. 7. Direct that within 21 days of the publication of these reasons the appellant file and serve written submissions as to the costs of the appeal in conjunction with the written submissions in AP 17/25494 concerning costs referred to in Order 8 below, including whether the question as to the costs of the appeal should be dealt with on the papers thereby dispensing with any oral hearing in relation to that matter. 8. Direct that within 21 days after receipt of the above written submissions the respondent is to file and serve written submissions in reply in conjunction with its written submissions in AP 17/25494 referred to in Order 9 below. In AP 17/25494 (the costs appeal): 9. Direct that within 21 days of the publication of these reasons the appellant is to file and serve written submissions in support of his appeal in AP 17/25494 concerning costs, including whether the appeal should be determined on the papers thereby dispensing with any oral hearing in relation to that appeal. 10. Direct that within 21 days after receipt of the written submissions referred to in Order 8 the respondent is to file and serve its written submissions in reply. Catchwords: APPEAL – summary dismissal – leave to appeal - provision of audited accounts and proposed annual budgets complying with the Retirement Villages Act 1999 – new evidence Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Retirement Villages Act 1999 Cases Cited: Collins v Urban [2014] NSWCATAP 17 Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 Wickstead v Browne [1992] NSWCA 272; 30 NSWLR 1 Category: Principal judgment Parties: John Howard Eager (Appellant) North Sydney Retirement Trust (Respondent) Representation: Appellant: Self-represented Respondent: Mr Koumoukelis File Number(s): AP 16/55362 and AP 17/25494 Decision under appeal Court or tribunal: New South Wales Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Date of Decision: 14 November 2016 Before: J Smith, Senior Member File Number(s): RV 16/30766 REASONS FOR DECISION Overview 1. Mr Eager, the Appellant, brings an appeal from a decision summarily dismissing most of his claim in respect of financial reporting aspects of the management of a retirement village in North Sydney. The decision was to dismiss three of the four orders sought by Mr Eager. It was a decision made under s 55 (1) (b) of the Civil and Administrative Tribunal Act 2013 (NCAT Act) to dismiss his claim on the grounds that the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance. 2. For the reasons set out below, we have decided to allow Mr Eager's appeal in so far as it concerns his claim for the operator of the retirement village to provide to residents audited accounts of the village for the year ended 30 June 2015 which comply with the Retirement Villages Act 1999 (the Act). 3. Despite the age of such accounts, we are of the opinion that two of his complaints about these accounts should proceed to be determined in the ordinary way instead of being disposed of summarily. 4. Mr Eager also appeals from the subsequent decision by the Tribunal concerning the costs of the summary dismissal application. In that appeal, we make directions for written submissions from the parties to be prepared in the light of our decision on the substantive appeal. The application 1. By his application lodged on 29 June 2016 Mr Eager sought four orders. Relevantly, Orders 2, 3 and 4 were as follows: ORDER 2: ORDER THAT within 42 days after the date of this Order is made the respondent shall comply with Retirement Villages Act 1999, section 119(1), except only as to the period within which to comply, by providing to each of the Residents Committee of James Milson Retirement Village, the applicant resident, and every other resident of the said Retirement Village who asks the respondent for one, a copy of the audited accounts of the said Retirement Village for the financial year ended 30 June 2015: such audited accounts to be in a format corresponding as closely as possible with the layout of the proposed annual budget for the financial year ended 30 June 2015 circulated to residents of the Retirement Village in May 2014 of which a copy is "App 113" attached to the Retirement Villages Application herein; and to include the particulars specified in section 119(2)(a) including, but not limited to, details of the income and expenditure of the Retirement Village during the financial year and details of the interests, mortgages and other charges affecting the property of, or forming part of, the Retirement Village (other than property or premises owned by residents of the Retirement Village) as at the end of 30 June 2015, and to include a statement in accordance with section 119 (2)(b) and section 119(3). ORDER 3: ORDER THAT within 42 days after the date of this Order is made the respondent shall supply a proposed annual budget for James Milson Retirement Village for the year ending 30 June 2016 in accordance with Retirement Villages Act 1999, section 112 and Retirement Villages Regulation 2009, clauses 17, 19, 26, and 29. ORDER 4: ORDER THAT within 42 days after the date of this Order is made the respondent shall supply a proposed annual budget for James Milson Retirement Village for the year ending 30 June 2017 in accordance with Retirement Villages Act 1999, section 112 and Retirement Villages Regulation 2009, clauses 17, 19, 26, and 29. 1. As to the accounting documents the subject of Orders 2 and 3, it was uncontroversial that documents purporting to be audited accounts and proposed annual budgets for the periods referred to had been supplied to residents. Mr Eager's case was that these documents did not comply with what the operator of the retirement village was statutorily obliged to provide. The statutory requirements to provide a proposed annual budget and audited accounts 1. Part 7 of the Retirement Villages Act 1999 (the Act) concerns the financial management of retirement villages in New South Wales. 2. As to proposed annual budgets, Sections 112 and 113 in Part 7 provide: 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. (2) A person who is the operator of more than one retirement village may provide a consolidated budget in relation to any 2 or more of the villages concerned, but, when providing the budget to the residents and former occupants of a particular village, must include a separate budget for that village. (3) The regulations may make provision for or with respect to: (a) matters that must be dealt with in a proposed annual budget, and (b) matters that must not be financed by way of recurrent charges, and (c) the form that the budget is to take. (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. (7) The residents of a retirement village may consent to not being supplied with a proposed annual budget if, in the year in which the consent is given, the total amount of the recurrent charges that are to be collected for the year does not exceed $50,000 or such other amount as may be prescribed by the regulations. (8) If the residents of a retirement village consent to not being supplied with a proposed annual budget under this section, subsections (1)–(6) and sections 113–117 do not apply in respect of the retirement village while the consent remains in force. (9) Consent given under subsection (7) remains in force until such time as: (a) the consent is revoked by a resolution of the residents of the village, or (b) the total of the recurrent charges to be collected for a financial year to which the consent relates exceeds $50,000 or such other amount as may be prescribed by the regulations. (10) The operator is required to notify the residents of the name of the auditor of the accounts at the annual management meeting if: (a) consent given under subsection (7) is in force, and (b) the operator of the village is required to have the accounts of the village audited under section 118. (11) The operator of a retirement village does not commit an offence under subsection (1) if consent given under subsection (7) is in force at the time that the operator is required to supply the proposed annual budget. 113 Order for proposed annual budget If the operator of a retirement village does not supply a proposed annual budget as required by section 112, a resident of the village may apply to the Tribunal for (and the Tribunal may make) an order directing the operator to supply the budget. 1. Clauses 17 and 19 of the Retirement Villages Regulation 2009 (now repealed), prescribe for more of the detail to be included in the proposed annual budget and its accompanying notice as follows: 17 Matters that must be dealt with in proposed annual budget (1) For the purposes of section 112 (3) (a) of the Act, the matters that must be dealt with in a proposed annual budget are the following: (a) the amount of recurrent charges payable by residents of the village during the year (including any expected increases in those charges in line with a fixed formula), (b) the method by which that amount has been calculated, (c) the total expected income from recurrent charges for the village for the year, (d) the effect of the expected surplus or deficit (as the case may be) for the current year on the finances of the village, (e) all proposed categories of expenditure (without grouping together 2 or more unlike categories), (f) the proposed expenditure on each of those categories, the proposed expenditure on each of them as indicated in the approved annual budget for the current year, and the likely actual expenditure on each of them for the current year, (g) if any expenditure (proposed or actual) is an apportionment of a total expenditure relating to the village and one or more other villages or businesses—the method or calculation by which the expenditure is apportioned, (h) if any residents of the village are paying significantly higher recurrent charges than some other residents of the village (for example, because they are receiving optional services)—the method or calculation by which expenditure is apportioned between the categories of residents concerned, (i) the total proposed expenditure of the village for the year, (j) the expected surplus or deficit for the year. (2) If the annual budget includes any costs associated with the operator's head office or any management or administration fees, these are to be broken down to show the goods and services to which they relate and the approximate cost of those goods and services. 19 Notice accompanying proposed annual budget (1) For the purposes of section 112 (4) (e) of the Act, the notice accompanying a proposed annual budget must contain the following statements: (a) the operator must provide such information in relation to the proposed expenditure as the Residents Committee (or, if there is no such Committee established in the village, any resident) reasonably requests, (b) the operator must not expend money received by way of recurrent charges otherwise than in accordance with the approved annual budget, except for: (i) a minor variation, or (ii) a variation between items in the approved annual budget if the variation does not reduce the level of services provided and does not cause total expenditure to be exceeded. (2) If the recurrent charges within the budget have been increased since the previous annual budget and section 106 (1) of the Act applies to that increase, the notice accompanying a proposed annual budget must also contain the following statements: (a) it is a requirement of section 112 of the Retirement Villages Act 1999 that the operator of the village supply each resident with a proposed annual budget for the financial year of the village at least 60 days before the commencement of the financial year concerned, (b) it is a requirement of section 114 of that Act that the residents advise the operator of whether or not they consent to the proposed budget (and, if they do not consent, they must specify the item or items in the proposed budget to which they object), (c) if the operator is not advised one way or the other, the residents are taken to have refused consent. (3) If the recurrent charges within the budget have not been increased since the previous annual budget or if those charges have been increased but section 106 (1) of the Act does not apply to that increase, the notice accompanying a proposed annual budget must also contain whichever of the following statements is applicable in the particular case: (a) the residents are taken to have consented to the proposed annual budget as the recurrent charges have not been increased since the previous annual budget, (b) the residents are taken to have consented to the proposed annual budget because the increase in the recurrent charges is in accordance with the formula set out in the village contract, (c) the residents are taken to have consented to the proposed annual budget because the increase in the recurrent charges is not more than the increase in the Consumer Price Index. 1. The operator is prohibited from expending money from recurrent charges received from residents otherwise than in accordance with the proposed annual budget approved by the residents (apart from minor variations), except in limited circumstances: s 116(3) and (3A). A resident can seek an order from the Tribunal that recurrent charges he or she has paid be repaid if the operator does not comply with the prohibition. 2. Consent to the expenditure in the proposed annual budget is provided for in s 114 as follows: 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. (2) The operator must provide such information in relation to the proposed expenditure as the Residents Committee (or, if there is no Residents Committee elected for the village, any resident) reasonably requests for the purpose of deciding whether consent should be given to the budget. (3) Without limiting subsection (2), it is reasonable for the Residents Committee or a resident to request to see quotations for any work proposed to be carried out or for any service or facility proposed to be provided. (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. (7) An operator who is the operator of more than one retirement village must deal with each village separately under this section. (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. As to audited accounts, section 119 of Part 7 provides: 119 Copies of annual accounts to be provided to residents (1) Within 4 months, or such other period as may be prescribed by the regulations, after the end of a financial year of a retirement village, the operator of the village must provide the residents of the village with copies of the audited accounts for that financial year in accordance with this section. Maximum penalty: 50 penalty units. (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), (iii) details of amounts received for insurance claims made in respect of any matter referred to in section 100 (2) (a) (i) or (ii) relating to the village during the financial year, (iv) details of any interests, mortgages and other charges affecting the property of, or forming part of, the village (other than property or premises owned by residents of the village) as at the end of the financial year, and (b) a statement that: (i) specifies whether or not money payable by the village operator to former residents during the financial year concerned was paid in full and on time, and, (ii) specifies, if any money so payable has not been paid, the amount concerned, details of the delay and the reasons for the delay, and (iii) contains the matters required to be included by subsection (3), and (iv) gives details of any matters that may prevent the village operator from meeting those liabilities, and (c) such other matters as may be prescribed by the regulations. (3) If the auditor is not satisfied that the operator has the capacity, during the financial year immediately following, to meet the liabilities relating to the village as and when they fall due, or if the auditor believes that there is considerable uncertainty regarding the ability of the operator to meet the liabilities of the village as and when they fall due during the financial year immediately following, a statement to that effect must appear in the audited accounts. (4) The format of the accounts must correspond as closely as possible with the layout of the proposed annual budget. (5) A person who is the operator of more than one retirement village may provide audited consolidated accounts in relation to any 2 or more of the villages concerned, but, when providing the accounts to the residents of a particular village, must include a separate statement of income and expenditure for that village. (6) It is sufficient compliance with this section if the copies of the accounts are provided to the Residents Committee for the retirement village to which they relate and to any individual resident who asks the operator for one. (7) If there is no Residents Committee for the village concerned, a copy of the accounts is to be: (a) displayed on the common property of the village in accordance with the regulations, and (b) provided to any individual resident of the village who requests a copy. The Tribunal's power in respect of relief 1. Orders 2, 3 and 4 sought an exercise by the Tribunal of its jurisdiction and power in respect of disputes between a resident and the operator of the village and the Tribunal's specific power to direct that an operator comply with what it is required to do under the Act or regulations: see sections 122 and 128(1)(a). The Tribunal decision 1. The Tribunal ordered that the application for orders 2, 3 and 4 of Mr Eager's application be dismissed. It also ordered that Order 1 sought by Mr Eager be adjourned for further directions. Order 1 did not seek the provision of accounting documents concerning the operation of the village. It sought relief in relation to the amount of recurrent charges Mr Eager was obliged to pay. The claim for this order was settled in February 2017. 2. As to Order 2 (concerning audited accounts for the year ended 30 June 2015), in respect of the issues of non-compliance raised by Mr Eager which are relevant on the appeal, the Tribunal concluded that: (1) The format of the audited accounts closely follows the layout of the proposed budget "for that year": at [37]. The reference to "for that year" was, clearly, intended to be a reference to a proposed budget for the year ending 30 June 2015 to which the Tribunal, specifically, referred in in paragraph 36 of the reasons as the document identified as "App 113". The Tribunal concluded that in most cases the line items were the same but there were some minor variations. It concluded that: "[t]here is simply no merit in the convoluted argument of the applicant that purports to demonstrate a failure to comply with s 119(4)"; at [37]. (2) It was satisfied that Mr Eager had raised a legitimate concern about the correctness of the audited accounts concerning the non-disclosure of the charge created by s 182B of the Act over the land within the village securing the residents entitlement to refund of monies paid to the operator: at [49]. However, the Tribunal concluded that nothing would be served by looking further into this issue because the information was no more than of historical interest given that the financial year in question had long since passed and any charges which may have existed at 30 June 2015 will have changed. In the circumstances, the claim was frivolous and misconceived: at [50] – [53]. 1. In addition to these conclusions the Tribunal rejected as a triable issue a contention that the accounts did not disclose all of the income of the village because the income was confined to the operating income. Mr Eager did not appeal in relation to this conclusion. However, as will be seen below, he did challenge the dismissal of his claim for Order 2 on the ground of new evidence obtained after the decision. He sought to rely on part of this new evidence to raise a new issue about the correctness of the income reported in the audited accounts for the year ended 30 June 2015 on the basis that it did not include substantial income derived from deferred management fees. 2. As to Orders 3 and 4 (concerning the proposed annual budgets for the years ended 30 June 2016 and 30 June 2017), in respect of the various issues of non-compliance raised by Mr Eager which are relevant on the appeal, the Tribunal concluded that the application for these orders was misconceived because the submission was based upon misunderstandings that s 112 was dealing with "approved" annual budgets (at [63] – [64]) and that the budgets needed to reflect the actual increase in recurrent charges for the forthcoming year to which the operator was, in truth, contractually entitled: at [77]. Grounds of appeal 1. Ultimately, Mr Eager came to pursue three of the six grounds of appeal set out in the section identified as item 5B in Attachment A to the Notice of Appeal lodged on 15 December 2016. Those three grounds of appeal were: … 2. The Tribunal erred in law in failing to apply s 114(8)(b) and ss 104(1)(a) and 105 of [the Act] and in failing to decide that proposed annual budgets for each of 2015-16 and 2016-17 financial years (the subject of Orders 3 and 4) had not become "approved annual budgets". …. 4. The Tribunal erred in law in deciding in paragraph 53 "Nothing would be served by looking further into the issue raised by this request for orders (Order 2). Hence, although the application for order 2 in regard to lack of details of charges is not found to be lacking in substance, I am satisfied that an enquiry directed at answering that question is frivolous and misconceived."…. 6. The Tribunal erred in law in (apparently) comparing the layout of the proposed annual budget for 2015-6 with the format of the annual accounts for the 2014-5 financial year: for the purpose of checking compliance with [the Act], s 119(4). 1. Mr Eager also advanced a fourth ground of appeal in the Notice of Appeal, namely that he had obtained significant new evidence since the Tribunal's decision. In part, the new evidence he sought to rely upon changed in his written submissions in which he indicated that he now relied upon some evidence in relation to the settlement of his claim for Order 1 which settlement occurred after the date of the Notice of Appeal. 2. In the Notice of Appeal each of these grounds was elaborated upon. Leave to appeal is required 1. Leave to appeal was required because s 80 (2) (a) provides that leave is required for an appeal from an "interlocutory decision". The orders appealed from consisted of a decision for "summary dismissal" within the meaning of that expression in sub- paragraph (h) of the definition of "interlocutory decision" in s 4(1) of the NCAT Act. Such characterisation as an interlocutory decision is consistent with the case law: for example, see Wickstead v Browne [1992] NSWCA 272; 30 NSWLR 1. 2. We approach the question of leave by applying the approach set out in Collins v Urban [2014] NSWCATAP 17 at [84], following that expressed by the Court of Appeal in BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19], namely: In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; Ordinarily it is appropriate to grant leave to appeal only in matters that involve: 1. issues of principle; 2. questions of public importance or matters of administration or policy which might have general application; or 3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed. The application for summary dismissal 1. The orders appealed from were made by the Tribunal pursuant to the power contained in s 55 (1)(b) of the NCAT Act, which, relevantly, provides: 55 Dismissal of proceedings (1) The Tribunal may dismiss at any stage any proceedings before it in any of the following circumstances: …. (b) if the Tribunal considers that the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance,…. 1. Correctly, in our opinion, Mr Eager submitted that the Tribunal in exercising the power in s 55 (1) (b) should have complied with what the High Court said in Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 namely (per French CJ and Gummow J at [24]-[25]): The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said: "The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried". More recently, in Batistatos v Roads and Traffic Authority (NSW) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following: "Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way." 1. For the reasons described below, in our opinion, it was not clear that the claim made by Mr Eager concerning the non-disclosure of the charge in the audited accounts raised no real question to be tried because it lacked utility. In the circumstances, in our opinion, there was a reasonably clear injustice to Mr Eager in summarily dismissing this claim. The point also raises an issue of some public importance about whether s119 can ground a claim concerning the correctness or accuracy of audited accounts and as to the application of an apparent discretion in the Tribunal to grant relief in circumstances where utility is an issue. 2. On the other hand, we do not draw the same conclusions about Mr Eager's claims in respect of the proposed annual budgets. The audited accounts issues 1. Grounds 4 and 6 in respect of item 5B of the appeal are concerned with the claim for provision of audited accounts for the year ended 30 June 2015 in compliance with s 119. 2. As to Ground 4 (the charge issue), Mr Eager's submissions included that: 1. As the Tribunal said, the respondent had not challenged the existence of the statutory charge over the village land to secure the refundable deposits. 2. It was his undisputed evidence that there was also a charge over the village land to Westpac Banking Corporation and this also had not been referred to in the audited accounts. 3. Details of the charge were not referred to in the audited accounts for the year ended 30 June 2015 or the audited accounts for the year ended 30 June 2016. 4. The Tribunal did not raise the issue of utility with him at the hearing. Had it done so, reference would have been made to the importance of the charges issue having regard to the apparent size of the borrowings by the operator from residents of the village. 5. The charge issue raised a matter of public importance – it was not just a matter between the residents and the operator and s 119 ought to be complied with. 1. The respondent did not make any submissions in support of any contention that there was no requirement to provide details of the charge in favour of the residents either because no such charge existed or because such a charge did not fall within the terms of s 119 (2)(a)(iv). 2. In its written submissions, the respondent submitted that no error by the Tribunal had been identified, that the Tribunal correctly exercised its discretion to dismiss and that it was not correct to say that the issue raised was one of public importance – it was an internal administrative matter that was now irrelevant to the current financial year ended 30 June 2018. 3. At the hearing, Mr Koumoukelis, the respondent's solicitor, submitted that the claim made must fail because in respect of such a claim one is not concerned to go behind the auditor's "certificate". This was not a reason that the Tribunal relied upon in respect of this particular aspect of Me Eager's claim. 4. As to this latter submission, we note that the statement of the auditor concerning this issue, as set out in the reasons was (at [47]): There were no interests, mortgages or other charges affecting the Retirement Village's property as at 30 June 2015. 1. As to the issue of utility, we do not think it is clear that the issue has become irrelevant and is now of historical interest only. Of course, we do not express any final view on the subject, but for present purposes we think it is more than arguable that provision of such information through the audited accounts is of utility. 2. As to this, we note that the respondent did not concede that compliance with s 119 (2)(a)(iv) does require disclosure of the details of the charge in favour of the residents. We know of no reason why the issue as to a requirement to disclose the charge should not continue to arise in future audited accounts. In the circumstances, determination of that issue would appear to be of utility to the preparation of such accounts. 3. Furthermore, in our opinion; 1. As is not uncommon with the use made of historical financial information, disclosure of the details of the charge as at 30 June 2015, if that were found to be required, could well be a relevant source of information for comparison purposes with future disclosures and for the pursuit of informed enquiries about the current status of the charges and the current financial position of the village. 2. We think that the treatment of an issue about utility in this context raises an issue of some public importance given that there will have been found to have been a failure to comply with a statutory obligation (assuming this has been established) and the objectives of the Act to set out particular rights and obligations of residents and operators, to facilitate resident input into the management of the retirement village and to facilitate the disclosure of information to prospective residents: s 3(a), (b) and (d) of the Act. 1. We also think that it is far from clear that a claim such as that brought by Mr Eager is unavailable or cannot succeed because the subject of charges has been specifically addressed in the auditor's statement even where that statement can be shown to be incorrect. In addition, this argument appears to raise an issue of some public importance about the content of the requirement concerning the disclosure of charges in s 119. 2. Accordingly, in our opinion, the Tribunal erred in dismissing the claim on the ground of utility. Furthermore, in relation to the defence of this claim issues of some public importance arise. In the circumstances, we grant leave to Mr Eager to pursue Ground 4 of his appeal and allow the appeal on this ground. 3. The Tribunal's reasons demonstrate that there was an arguable basis for the contention that refundable deposits of residents were the subject of a charge created by s 182B of the Act over the village land. The Tribunal's reasons did not refer to Mr Eager's contention that there was also a relevant charge in favour of Westpac. If Mr Eager wishes to pursue a contention in respect of a charge in favour of Westpac in respect of his claim for Order 2 but this is objected to by the respondent then it will be a matter for the Tribunal below to determine whether he should be permitted to do so. This question can be addressed at the directions hearing that we order take place concerning the future conduct of Mr Eager's claim for Order 2. 4. As to Ground 6 (the layout issue), Mr Eager's submissions included that: 1. The Tribunal's conclusion was so at odds with a comparison of the two documents (the proposed budget and the audited accounts for 2015) that it appeared the Tribunal compared the audited accounts with the wrong document, namely with the proposed budget for the year ended 30 June 2016, which, it was submitted, did more closely correspond with the layout of the 2015 audited accounts. In support of this submission, he referred to some oral submissions at the hearing from the solicitor of the respondent that he submitted may have led the Tribunal to make the wrong comparison. 2. When the correct documents were compared, it could be seen that there were 21 specific line items of income and expenditure in the proposed budget compared with 32 line items in the relevant accounts and that without some reconciliation enabling a comparison to be made the 32 line item format should be sufficient to conclude that the statutory requirement for close correspondence in format had not been complied with. Furthermore, only 3 of the 32 line items in the accounts were given budget values for comparison purposes. 3. He was critical of the inclusion in the accounts of two line items, namely those for audit fees and computer expenses, neither of which categories appeared in the budget. 4. The presentation of information of recurrent charges in the accounts was completely different to that in the budget in that in the accounts there was an aggregated disclosure of income as "Residents fees (including Rental Income and Operator Vacant Unit Contributions) without specifying separate values for each. 1. The respondent submitted that: 1. It is clear that the Tribunal was comparing the correct documents. In this respect, the respondent relied upon the express reference in the reasons (at paragraph 36) to the fact that he was reviewing "App 113", which was the proposed budget for the year ended 30 June 2015. 2. The challenge raised a question of fact only. There was no issue of principle or public importance involved and dismissal of this claim did not involve an injustice that was reasonably clear or a factual error that was unreasonably arrived and clearly mistaken. 1. Having considered the points of difference and examined the two documents in issue, we are not satisfied that the Tribunal's decision on this point was more than arguably wrong. Accordingly, we do not grant leave to appeal on this ground. 2. In arriving at this conclusion, we consider that: 1. No question of principle or matter of public importance arises. 2. The statutory requirement is for as close a correspondence as possible. Precise correspondence is not required. 3. The fact that there are extra line items for income and expenditure in the audited accounts does not by itself mean that there has been a failure to comply with s 119 (4). On the contrary, to some extent, at least, the extra line items provide a breakdown of more general information of a category of expenditure in the budget. If the disparity in line items had been the other way around, it may have been harder to justify the differences. 4. Mr Eager referred us to his detailed written submissions to the Tribunal (at B4a to B4f of his Reply to Motion to Strike Out), which we were not specifically referred to in the Tribunal's reasons. However, where in those submissions he dealt with specific aspects of the information in the documents (see at B 4(e)) his points did not appear to be directed to the specific issue as to correspondence of layout. His points appeared to be more directed to the variety of different figures that had been given for income and expenditure in a number of documents including the documents in issue. 5. The fact that there are amounts for audit fees and computer expenses in the audited accounts, but not in the budget, might lead to criticism of the adequacy of the budget. However, that is a different issue to the question we are dealing with. 6. In both the Notice of Appeal and in his written submissions, Mr Eager made points concerning the liability of the residents to pay the audit fees and as to the ability of the auditors to audit such fees and the appropriateness of them doing so. However, these points are not relevant to the issue in hand. The proposed annual budget issues 1. We begin our consideration of the proposed annual budget issues raised in the appeal by remarking that the essence of Mr Eager's argument in support of Ground 2 of his appeal was not altogether clear. 2. One aspect of this difficulty was the focus of the ground of appeal on an alleged failure of the Tribunal to recognise that the proposed annual budgets were not approved budgets. The problem with this focus is that the relevant provisions of the legislation which prescribe the content of such budgets do not refer to the subject of approved budgets. 3. Nevertheless, as we understood it, the substance of Mr Eager's contention was that the proposed annual budgets did not comply with s 112 and Regulation 17 because it could be demonstrated that a correct calculation of the increase in recurrent charges payable by residents in the forthcoming year, in accordance with the fixed formula in the village contracts, would reveal a different figure than that set out in the budget. In connection with this contention, Mr Eager complained that the notices accompanying the proposed budgets, which were required to be given, incorrectly stated that the recurrent charges had been increased in accordance with the fixed formula and that, accordingly, the residents were taken to have consented to the expenditure. 4. Mr Eager referred to various documents, including those concerning his own unit, as supporting his contention that the charge increase had not been calculated out correctly. 5. The respondent submitted that the Tribunal was correct in concluding that Mr Eager's contentions were misconceived. 6. We do not think that the conclusion of the Tribunal was arguably wrong. 7. In this respect, we consider that: 1. The statutory requirements in Regulation 17 concerning recurrent charges do not and could not sensibly require that the figure for those charges reflect the actual figure that the operator will receive or will be entitled to receive. The figure is, necessarily, a prediction in respect of which there will be uncertainties, including, as to the correct application of a fixed formula. In this regard, it is important that the word "expected" is used to describe the fixed formula increase to be included in the figure for recurrent charges: Regulation 17(1) (a). 2. We do not see how this conclusion can be altered by the provision for deemed consent to expenditure under s 114(8) (b) in circumstances where charges have been varied, including in accordance with a contractual fixed formula (as permitted by s 104 (1) (a)). If such a variation is found to have been contrary to the contract then it may be that the conditions for deemed consent are not satisfied. Alternatively, even if, in such circumstances there is deemed to be consent to the expenditure, that does not give the operator an entitlement to receive from a resident any recurrent charges other than those to which it is entitled under its contract with the resident. Either way, we do not see how it can be said that a proposed annual budget is non-compliant simply because it can be shown that the figure for recurrent charges is not authorised by one or more of the individual contracts with residents. 3. In saying this, we do not address any different question to the one presented by Mr Eager's contention such as whether the requirement imposed by Regulation 17 might be construed as one requiring a genuine or reasonable estimate of the recurrent charges for the forthcoming year. 1. As we have said, in his submissions on this issue, Mr Eager was critical of the accuracy of parts of the notices accompanying the budgets. However, we are not concerned with a claim grounded upon misrepresentation or misleading conduct. In saying this, we do not in any way suggest that such a claim might be well founded. We have simply not been concerned to deal with any such claim. 2. Accordingly, we refuse leave to appeal on Ground 2. Fourth ground of appeal - new evidence 1. As a separate ground of appeal, Mr Eager relied upon new evidence which came into existence after the decision of the Tribunal. 2. The new evidence was identified in Mr Eager's written submissions dated 19 June 2017 as: 1. The final two pages of the attachments to a letter from the operator's solicitors dated 8 December 2016 concerning a reconciliation of his recurrent charges. This letter was provided in response to a direction from the Tribunal made on 8 November 2016 concerning Order 1 of Mr Eager's application. 2. An agreement and Notice of Order dated 27 February 2017 concerning the settlement of Mr Eager's application for Order 1. 1. We deal, first, with the new evidence ground based upon the two pages of the attachments to the letter dated 8 December 2016. Mr Eager submitted that this evidence was relevant to his application for Order 2 concerning audited accounts for the year ended 30 June 2015. He submitted that this new evidence justified the order he sought on the appeal that the order dismissing his application for Order 2 be set aside. 2. The evidence consisted of a copy of a statement from James Milson Village referable to Mr Eager for the period from 19 December 2013 to 30 June 2016. The statement reveals the making of a monthly debit of $1,194.27 from an opening balance of $238,854.00. These debits commence on 1 April 2014 and cover the period through to 1 June 2016. After the making of these monthly deductions, the statement sets out a "balance due" of $202,594.24. The debits are described as "Deferred Management Fee" for a stated monthly period. Whilst at the bottom of the second page of the document there are entries for identifying a payment by Mr Eager to the village, there is, clearly, stamped at the end of the statement in large print the words "NO PAYMENT REQUIRED". To the right of those words is the entry total due of $202,594.24. 3. In the attachment to the Notice of Appeal, Mr Eager stated that the opening balance in this statement must represent his "Ingoing Contribution" to the village. He submitted that the statement discloses the "appropriation" by the village of a monthly deferred management fee against a loan account of monies owed to him by the operator consisting of the amount of this "Ingoing Contribution". He said that such a reduction of the monies owed to him attributed to a deferred management fee was not known to him until he received the letter dated 8 December 2016. 4. Mr Eager said that the monthly "appropriations" from his loan account have not been explained by the respondent. He submitted that the "appropriations" were relevant to his claim for Order 2 because they were income in nature and had not been included in the reported income in the audited accounts. Mr Eager submitted that, as a consequence, the audited accounts for the year ended 30 June 2015 did not comply with the requirement in s 119(2) (a) (i) to include in the accounts the details of income. 5. At the hearing of the appeal, Mr Eager was cross-examined as to the issue whether the evidence concerning the new evidence concerning deferred management fees was unknown to Mr Eager at the time of the hearing in the Tribunal. The cross-examination did not succeed in establishing that Mr Eager had been aware of such management fees being charged by the operator before he saw the new evidence and before the hearing in the Tribunal. Mr Eager agreed that he was aware that departure fees were chargeable but he said he did not understand that these accrued on an ongoing basis and that he did not recognise such fees as a deferred management fees. 6. The respondent submitted that the new evidence was only relevant to Order 1 sought in the application, it was irrelevant to the issues on the appeal and did not assist Mr Eager in his claims for relief the subject of the appeal. 7. In oral submissions, Mr Koumoukelis, submitted that the deferred management fee was not a recurrent charge within the meaning of that term in the Act: s 4. That section provides: recurrent charge means any amount (including rent) payable under a village contract, on a recurrent basis, by a resident of a retirement village. 1. Without so deciding, this may well be correct. Mr Eager did not point to any material to support any contention that the management fee was payable under a village contract. Had he done so this may have been inconsistent with his position that he was not aware of such fees until he received the letter dated 8 December 2016. 2. However, the fact that these were not recurrent charges does not dispose of the issue as to whether such an item is or is not income of the village within the meaning of s 119 (2) (a)(i) of the Act. 3. There remains a considerable degree of mystery about this new evidence concerning deferred management fees. We recognise that we have received limited information about the subject. On the appeal, the respondent has not sought to adduce any evidence about the statement and its contents. This is not meant as a criticism of the respondent but it does leave us with material revealing that there is, at least, an arguable basis for a conclusion that a monthly management fee of some nature was being earned by the operator and that such a fee was not included in the income recorded in the audited accounts for the year ended 30 June 2015. 4. As to the latter point, it is arguable that all of the reported income in those audited accounts (apart from a small amount of "Other Income") described as "Residents' fees (including Rental Income and Operator Vacant Unit Contributions)" was entirely made up the recurrent charges and these other two items of rental income and operator vacant contribution. This is because the amount of the income reported is near to the amount of the income reported in the proposed annual budget for the year ended 30 June 2015, which figure is required to be a reporting of the recurrent charges. Accordingly, it is arguable that if the reported income in the audited accounts was to include an amount referable to such deferred management fees such income would be significantly higher than the amount presented in the audited accounts. 5. In our opinion, leave should be granted to Mr Eager to appeal against the dismissal of Order 2 sought in his application on the ground of the new evidence concerning the deferred management fees and the appeal on that ground allowed. On this point concerning deferred management fees, there is, in our opinion, a triable issue to be determined. 6. We do not express any opinion as to the merits of this issue beyond that Mr Eager has an arguable claim for the relief he seeks in Order 2 on the ground that audited accounts for the year ended 30 June 2015 containing income referable to deferred management fees are required to be provided to the residents. 7. Having regard to the auditor's opinion in the audited accounts, we also note that this issue appears likely to raise a similar issue concerning the content of the requirement in s 119 (2) (a) (i) as arises with respect to the content of s 119 (2) (a) (v) concerning the charge issue. 8. As to the second category of new evidence, we refuse leave to appeal on the grounds of this material. The material goes to the incorrectness of the figure for recurrent charges in the proposed annual budgets. However, the material does not assist Mr Eager to establish that he has an arguable claim for the relief he sought in Orders 3 and 4 because of the reasons we have given for refusing leave to appeal on Ground 2. Costs 1. We have referred above to Mr Eager's appeal against a costs decision made by the Tribunal on 19 May 2017 (AP 17/2594). The parties will be directed to provide written submissions in that appeal to be made in the light of the outcome of this appeal. Orders 1. For the above reasons, we make the following orders: In AP 16/55362 (the substantive appeal): 1. Grant leave to appeal against the dismissal of the claim for Order 2 in the application on Ground 4 of the grounds of appeal set out under item B of the attachment to the Notice of Appeal and on the ground of new evidence concerning alleged deferred management fees earnt by the respondent 2. Leave to appeal is refused on all other grounds of appeal. 3. Allow the appeal on the grounds referred to in Order 1. 4. Order 1 of the orders made by the Tribunal on 14 November 2016 is set aside but only in so far as it dismissed the claim for Order 2 in the application based upon the alleged failure of the audited accounts for the year ended 30 June 2015 to comply with s 119 (2) (a) (i) and (iv) of the Retirement Villages Act 1999. 5. The respondent's notice of motion dated 19 September 2016 is dismissed in so far as it sought dismissal pursuant to s 55 (1) of the Civil and Administrative Tribunal Act 2013 of the appellant's claim for Order 2 in the application based upon the alleged failure of the audited accounts for the year ended 30 June 2015 to comply with s 119 (2) (a) (i) and (iv) of the Retirement Villages Act 1999. 6. The appellant's claim for Order 2 based upon the alleged failure of the audited accounts for the year ended 30 June 2015 to comply with s 119 (2) (a) (i) and (iv) of the Retirement Villages Act 1999 is to be reconsidered by the Tribunal and the Tribunal is to fix a date for the making of directions for the future conduct of that claim. 7. Direct that within 21 days of the publication of these reasons the appellant file and serve written submissions as to the costs of the appeal in conjunction with the written submissions in AP 17/25494 concerning costs referred to in Order 8 below, including whether the question as to the costs of the appeal should be dealt with on the papers thereby dispensing with any oral hearing in relation to that matter. 8. Direct that within 21 days after receipt of the above written submissions the respondent is to file and serve written submissions in reply in conjunction with its written submissions in AP 17/25494 referred to in Order 9 below. In AP 17/25494 (the costs appeal): 1. Direct that within 21 days of the publication of these reasons the appellant is to file and serve written submissions in support of his appeal in AP 17/25494 concerning costs, including whether the appeal should be determined on the papers thereby dispensing with any oral hearing in relation to that appeal. 2. Direct that within 21 days after receipt of the written submissions referred to in Order (1) the respondent is to file and serve its written submissions in reply. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar ********** 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: 28 February 2018