Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Moulton v Aulak Pty Ltd [2018] NSWCATAP 218 Hearing dates: 7 August 2018 Date of orders: 18 September 2018 Decision date: 18 September 2018 Jurisdiction: Appeal Panel Before: A Bell SC, Senior Member D. Goldstein, Senior Member Decision: 1. Pursuant to s41 of the Civil and Administrative Tribunal Act 2013 Ian Moulton is granted an extension of time to 18 May 2018 to file his Notice of Appeal in these proceedings. 2. The Appeal is dismissed. Catchwords: Retirement village budgets – approval of under the Retirement Villages Act 1999 Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2014 Retirement Villages Act 1999 Retirement Villages Amendment Act 2008 Retirement Villages Regulation 2017 Retirement Villages Regulation 2009 Cases Cited: Jackson V NSW Land and Housing Corporation [2014] NSWCATAP 22, Texts Cited: None cited Category: Principal judgment Parties: Ian Moulton: Appellant Aulak Pty Ltd: Respondent Representation: Counsel: Ms Smythe for the Appellant Mr Lindgren for the Respondent Solicitors: Seniors Rights Service for the Appellant Jenkins Legal Services for the Respondent File Number(s): AP 18/23135 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Nil Date of Decision: 26 April 2018 Before: K Ross, Senior Member File Number(s): RV17/29983 REASONS FOR DECISION 1. This is an appeal from an order by the Tribunal dismissing an application to amend an originating application so as to seek orders under section 122 of the Retirement Villages Act 1999 (the Act). 2. The appellant, Mr Moulton, is a resident of a retirement village known as Toukley Waters Village ('Village'). The respondent, Aulak Pty Ltd, is the operator of the Village ('Operator'). 3. On about 28 April 2017 the Operator provided a proposed annual budget for the Village for the 2017 – 2018 financial year to the residents ('2018 Budget'). Proceedings at first instance 1. On 5 July 2017 Mr Moulton commenced an application in the Tribunal under s115 (1) of the Act challenging the proposed 2018 Budget. The application in terms sought an order under s115 of the Act in respect of the proposed 2018 Budget. In submissions to the Tribunal Mr Moulton identified three areas of complaint with the proposed 2018 Budget, namely the inclusion of costs for certain insurances, the cost of a health and safety report and management fees and costs which had not been itemised. 2. Sections 112 to 117 of the Act constitute Division 5 of Part 7 of the Act, dealing with proposed and approved annual budgets. 3. Section 114(1) provides that the operator of a retirement village must seek the consent of the residents of the village to the expenditure itemised in a proposed annual budget. Subsections (2) – (6) of s114 set out procedures to be followed by the operator and the residents after the operator has sought the consent of the residents to the proposed annual budget. Section 114( 8) provides: "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: have not been varied, or have been varied in accordance with section 104(1)(a) or 105A". 1. Section 104(1) (a) states that a village contract may provide that any recurrent charges payable under it are to be varied according to a fixed formula. Section 105A concerns the variation of recurrent charges payable under a village contract if the contract provides that recurrent charges are to be varied otherwise than in accordance with a fixed formula and the variation does not exceed the prescribed CPI variation. 2. Section 115(1) of the Act provides: "If the residents of a retirement village refuse consent to the expenditure itemised in the proposed annual budget, the operator or a resident may apply to the Tribunal for an order in respect of the expenditure proposed for the financial year concerned". 1. Section 116 (1) (a) provides that a proposed annual budget is taken to be an approved annual budget if the residents of a retirement village consent to expenditure in accordance with the proposed annual budget. Section 116(3) provides than an operator must not expend money received by way of recurrent charges otherwise than in accordance with the approved annual budget or any amendment authorised under s117. 2. Section 117 permits an operator to apply to the Tribunal for an order approving an amendment to an approved annual budget. There is no provision entitling a resident to make such an application. 3. The application was first heard by the Tribunal on 23 January 2018. At the hearing the Operator contended that the Tribunal had no jurisdiction to determine the application because the recurrent charges in the 2018 Budget had been increased in accordance with the Consumer Price Index ('CPI'). The Operator contended that in those circumstances, s114(8) of the Act applied and the residents of the Village were taken to have consented to the proposed 2018 Budget. 4. The Tribunal Member in her reasons on 23 January 2018 recorded that: "There was no dispute about the following matters and the Tribunal makes the following findings: The village contracts provide for variation of the recurrent charges by way of notice and not by fixed formula. The increase in recurrent charges proposed was an increase in accordance with the CPI." 1. The effect of those undisputed findings was that s105A of the Act applied to the variation of recurrent charges in the proposed 2018 Budget and hence that the residents were taken to have consented to the proposed 2018 Budget by virtue of s114(8)(b) of the Act. 2. The Tribunal Member stated that in those circumstances "the application under s115 must be dismissed". However, the Tribunal Member went on to consider whether the application could have been brought as an application under section 122 of the Act. As neither party had addressed that issue, the Tribunal Member made directions for the parties to provide written submissions on whether leave should be granted to amend the application to seek orders under s122 of the Act and whether the dispute could be determined under s122. In addition to those directions, an order was made for the hearing to be adjourned. No order was made for the dismissal of the application. 3. Section 122 is in Part 8 of the Act dealing with disputes. Section 121 provides that Part 8 of the Act has effect despite anything else in the Act or any other Act or law. Section 122 (1) provides: "If a resident (or residents) or the operator of a retirement village claims that a dispute (including a dispute as to whether the operator is discharging his or her obligations under section 66 (2) (b)) has arisen between the resident and the operator or the operator and one or more residents, the resident (or residents) or operator may apply to the Tribunal for (and the Tribunal may make) an order in respect of the dispute." 1. Section 128 of the Act confers wide powers on the Tribunal to make orders, including an order directing an operator to comply with a requirement of the Act or the regulations, and an order for the payment of an amount of money. Section 127 provides that the Tribunal is not limited in the amount of money that it may order to be paid. 2. In due course Mr Moulton applied to amend his application to seek relief under s122 of the Act and both parties made submissions in relation to s122. Mr Moulton identified three issues in dispute, namely the three areas of complaint in his original application. First, Mr Moulton disputed the inclusion in the 2018 Budget of part or all of the insurance premium payable by the Operator. Mr Moulton contended that the insurance premium included in the 2018 Budget was for insurance cover that exceeded the cover required by s100 of the Act. Secondly, Mr Moulton contended that the 2018 Budget included an amount for management fees and expenses which had not been itemised as required by regulation 19 of the Retirement Villages Regulation 2017 ('regulation'). Thirdly, Mr Moulton contended that the 2018 Budget included an item for the provision of a health and safety report which was the responsibility of the Operator under s58A (2) (c) of the Act. 3. Mr Moulton applied to amend his application to seek the following orders under s122 of the Act: 1. That the insurance item be omitted from the 2018 Budget; 2. That the health and safety report item be omitted from the 2018 Budget; and 3. That management fees and costs be itemised in accordance with regulation 19 or omitted altogether. 1. The Operator opposed the application to amend, contending that as the residents were deemed to have consented to the proposed 2018 Budget there was no dispute to which s122 of the Act could relate. 2. On 26 April 2018 the Tribunal dismissed the application. The Tribunal Member held that because of the deemed consent under s 114(8) of the Act, there was no dispute capable of resolution under s122. For that reason the Tribunal declined to allow the amendment to seek orders under s122. Appeal 1. On 18 May 2018 Mr Moulton lodged a Notice of Appeal from the Tribunal order made on 26 April 2018 dismissing his application to amend the originating application to seek orders under section 122 of the Act. 2. The Notice of Appeal raised a question of law by stating as a ground of Appeal that 'The Tribunal erred in law when it found that a retirement village budget which has deemed approval under s114(8)(b) cannot be the subject of a dispute to which s122 applies.' 3. Section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 ('NCAT Act') provides that an internal appeal may be made as of right on a question of law. It follows that this appeal is brought as of right. 4. Mr Moulton acknowledged that as proceedings allocated to the Consumer and Commercial Division of the Tribunal arising under the Act are "residential proceedings" as defined in the Civil and Administrative Tribunal Rules 2014 ('NCAT Rules'), rule 25(4) (b) of the NCAT Rules required an appeal to be lodged within 14 days from 26 April 2018. Accordingly Mr Moulton required an extension of time under section 41 of the NCAT Act. New Evidence 1. At the commencement of the hearing of the appeal, the Operator sought to tender two new documents which had not been tendered in evidence before the Tribunal Member. The first was a service contract dated 19 December 2013 between the Operator and Mr Moulton and the second was a document recording orders made in other proceedings between the Operator and Mr Moulton. Mr Lindgren, the solicitor appearing for the Operator, said that these documents were sought to be tendered in order to establish that Mr Moulton had in fact consented to the charges about which he now complains (and that there was not merely a deemed consent by virtue of s114 (8) of the Act). Ms Smythe, the solicitor appearing for Mr Moulton, stated that Mr Moulton objected to the tender of these documents unless Mr Moulton was permitted to rely upon them to contend that the 2018 Budget had not been varied in accordance with s104 or 105A of the Act and that accordingly Mr Moulton was not deemed to have consented to the proposed 2018 Budget under s114 (8) of the Act. 2. Both the issue which the Operator and which Mr Moulton sought to raise by reason of this new evidence were issues which had not been addressed by the Tribunal Member. Indeed, the issue sought to be raised by Mr Moulton was contrary to an undisputed finding of fact by the Tribunal Member which was central to her decision. In these circumstances, the Appeal Panel decided that unless both parties consented to an order under section 81(1)(e) of the NCAT Act that the case be reconsidered by the Tribunal with this further evidence, the evidence would be rejected. 3. Ms Smythe said that Mr Moulton consented to an order that the case be reconsidered by the Tribunal with this further evidence. However Mr Lindgren said that the Operator did not consent to that course. Accordingly, the Appeal Panel rejected the tender of the two documents, which were marked for identification MFI 1 and MFI 2 respectively. Extension of Time 1. The notice of appeal signed by Mr Moulton indicated that the Notice of Appeal had been lodged 8 days late due to confusion between the 14 day time limit for appeals in "residential proceedings" in the Consumer and Commercial Division of the Tribunal and the 28 day time limit for other appeals provided for by rule 25(4)(c) of the NCAT Rules. Mr Moulton submitted that there was an explanation for the delay, that the appeal raised an issue of public interest affecting many thousands of elderly people residing in New South Wales retirement villages and that no particular prejudice had been suffered by the Operator as a result of the appeal being lodged eight days late. 2. Against the possibility that the Appeal Panel might find that the application was in fact dismissed on 23 January 2018, Mr Moulton submitted that the only relevant decision made on 23 January 2018 was that the hearing be adjourned. We are satisfied that the Tribunal did not make an order dismissing the proceedings on 23 January 2018. 3. The Operator submitted that Mr Moulton had not demonstrated that the appeal raised a matter of public interest, that Mr Moulton did not represent any other resident of the Village, that Mr Moulton's explanation for the delay was unsatisfactory, that the Operator had a vested right to retain the benefit of the decision, and that Mr Moulton did not have a fairly arguable case. However the Operator did not point to any particular prejudice which it would suffer if an extension of time was granted, other than the loss of its right to retain the benefit of the decision if an extension was not granted. 4. Having regard to the principles identified by the Appeal Panel in Jackson V NSW Land and Housing Corporation [2014] NSWCATAP 22, we are comfortably satisfied that it is appropriate to make an order under section 41 of the NCAT Act granting Mr Moulton an extension of time to lodge the notice of appeal. We consider the decisive factors to be the short period of the delay, the explanation for the delay and the lack of any particular prejudice suffered by the Operator as a result of the delay. Submissions of the Parties Relating to Section 122 of the Act 1. Mr Moulton conceded that deemed consent under s114 (8) (b) deprived the Tribunal of jurisdiction to hear an application under s115. However he submitted that the Tribunal made an error of law when it found that a retirement village budget which has deemed approval under s114(8) (b) of the Act cannot be the subject of a dispute to which s122 applies. 2. Mr Moulton submitted that the Tribunal had construed the issue too narrowly. He submitted that the Tribunal did not appear to have considered the question of whether a dispute regarding a village budget arising from an alleged breach of another section of the Act can be heard under s122, regardless of the operation of s114 (8)(b). 3. Mr Moulton submitted that the Operator had breached three provisions of the Act in the 2018 Budget. First, Mr Moulton submitted that the Operator had breached s100 of the Act by including as recurrent charges in the 2018 Budget the cost of insurance for the Operator's contents and gross income as well as the cost of theft and product liability insurance. Mr Moulton submitted that none of these types of insurance were required under s100 of the Act and s100(6) only permitted the types of insurance required under s100 to be funded from recurrent charges if they were included in the approved annual budget. 4. Secondly, Mr Moulton submitted that the Operator had breached s 58A of the Act, which requires, among other things, that the operator of a retirement village undertake a safety inspection at least once each year and make a safety inspection report on the findings of the inspection. Mr Moulton submitted that it was an implicit requirement of s58A that the Operator was required to incur the expense of these reports itself and that it was not permitted to pass on that expense to the residents, as had occurred in the proposed 2018 Budget. 5. Thirdly, as we understood it, Mr Moulton submitted that the Operator had breached s112(3)(a) of the Act in conjunction with regulation 19 by failing to provide an itemisation of the management fees charged in the proposed 2018 Budget. Section 112 (3) (a) of the Act provides that the regulations may make provision for matters that must be dealt with in a proposed annual budget. Regulation 19(2)(a) provides, for the purposes of s112 (3)(a) of the Act, that if the annual budget includes any management fees, those fees are to be itemised to show the goods and services to which they relate and the approximate cost of those goods and services. The 2017 Regulation only came into effect on 1 September 2017, after Mr Moulton had commenced his application. However, regulation 17 of the Retirement Villages Regulation 2009 was in similar form to Regulation 19 of the 2017 Regulation. 6. Mr Moulton submitted where a budget contained items which breached provisions of the Act, the deemed consent under s114 (8) could not deprive the Tribunal of jurisdiction to determine a dispute about whether the Act had been breached under s122. 7. The Operator submitted that the Tribunal correctly construed the relevant statutory provisions and correctly found that, due to the deemed consent pursuant to s114 (8) (b) of the Act, there was no dispute capable of resolution pursuant to s115 or s122 of the Act. 8. The Operator submitted that in circumstances where a resident is deemed to have consented to the then proposed budget, the resident is not permitted to dispute individual line items appearing in that budget. 9. The Operator submitted that ss105A and 114(8)(b) of the Act were inserted by operation of Schedule 1 to the Retirement Villages Amendment Act 2008. The Operator submitted that the Second Reading Speech for that legislation confirmed the literal interpretation of the Act for which it contended. In her second reading speech, Ms Linda Burnie, Minister for Fair Trading, stated on 2 December 2008: "Operators will be able to make allowance for contingencies and to vary expenditure between line items in a village budget. This will provide them with greater flexibility over the financial management of their village. Operators will also be able to seek the consent of residents not to have to supply them with a budget prior to each financial year – but this is only with consent. Additionally, 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. This will be an incentive to operators to keep their costs down, which should help residents struggling to meet rising costs on fixed incomes." 1. The Operator submitted that Mr Moulton's contention that a dispute regarding a village budget arising from an alleged breach of another section of the Act could be heard under s122, regardless of the operation of s114(8)(b), would only make sense if the deemed consent was qualified in some way. However, the Operator submitted that no such qualification appeared in the provision. 2. The Operator submitted that whilst s122 of the Act granted the Tribunal a broad general power to resolve disputes, in the present circumstances the provision had achieved Parliament's desired intention of keeping recurrent charges at or below inflation. 3. The Operator also submitted that a resident was not shut out from a remedy if a payment was made to an Operator to which it was not lawfully entitled. In these circumstances, the Operator submitted that s109 of the Act would operate to enable the Tribunal to make an order directing the refund of overpaid recurrent charges. The Operator submitted that s109 operated to ameliorate any injustice arising from a resident being unable to rely on s22 because of a deemed consent under s114(8). 4. Section 109(1) of the Act provides: "A resident of a retirement village may apply to the Tribunal for an order directing the refund of overpaid recurrent charges on any grounds, including the ground that an increase in the charges came into effect otherwise than in accordance with this Division." 1. Both Mr Moulton and the Operator submitted that if the Appeal Panel decided that the appeal should be allowed and the amendment granted, then the matter should be referred back to the Tribunal to determine whether the 2018 Budget should be modified in the manner contended for by Mr Moulton. Neither party asked the Appeal Panel to determine those issues. Decision 1. The amendments to his application sought by Mr Moulton which were the subject of this appeal focussed on and sought that items be omitted from the 2018 Budget (or in the case of the management fees, that they be itemised or omitted). In other words, Mr Moulton in substance sought precisely the same relief as he had originally sought, but relying on s122 of the Act instead of section 115. 2. Mr Moulton recognised in his submissions that the deemed consent by virtue of s114(8) meant that he was not able to challenge the 2018 Budget under s115 of the Act. In our opinion, is not open to Mr Moulton to recast his application under section 122 of the Act to seek the same relief which was originally sought under s115. Both the original application under s115 and the proposed amended application under s122 fail to address the fact that the 2018 Budget is taken to be an approved annual budget under s116 of the Act by virtue of the deemed consent under s114 (8) of the Act. As the 2018 Budget is approved, the Operator is entitled to, and indeed required to expend money received by way of recurrent charges in accordance with that budget. There is no provision in the Act entitling Mr Moulton to apply for an amendment to an approved budget. 3. Nor in our opinion is there anything in the relevant statutory language to support Mr Moulton's submission that qualifications should be read into the deemed consent arising under s114 (8) depending upon whether an item in the budget is alleged or is found to be in breach of another provision of the Act. 4. We therefore consider that Mr Moulton is not able to seek orders under s122 of the Act that items be omitted from the 2018 Budget, because that budget has been approved under s116 of the Act. For these reasons the appeal should be dismissed. In reaching this view, it has not been necessary for us to form any view on whether the Operator has breached the Act in the respects alleged by Mr Moulton. 5. The conclusion which we have reached in this matter does not in our opinion mean that Mr Moulton is precluded in future from disputing the legality of acts or omissions by the Operator in purported compliance with the Act or from seeking relief from the Tribunal in respect of those matters. The Operator submitted that if Mr Moulton was obliged under the approved 2018 Budget to pay for recurrent charges which amounted to a breach of the Act by the Operator, then Mr Moulton could apply to the Tribunal for an order under s109 of the Act seeking the refund of those charges. We see no reason why Mr Moulton could not also seek appropriate orders under ss122 and 128 of the Act to resolve a dispute about the legality of charges which Mr Moulton was obliged to pay to the Operator by virtue of an approved budget. ********** 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: 18 September 2018