Wednesday, 30 October 2019

Votings Rights of Single Retirement Village Residents Trampled.

Retirement Village advocate Les Scobie has written to the relevant minister over concerns the voting rights of single Retirement Village residents are being trampled.

"The Hon. Marlene Kairouz,
Minister for Consumer Affairs,
Level 16, 121 Exhibition Street,
Melbourne. Vic. 3000.

Dear Minister,

Re:- Need for amendment to Section 38(4) of the Retirement Villages Act 1986.

In the Act under Section 3 Definitions the voting rights of couples (not co-tenants) at an annual meeting are defined as having only one vote.

RETIREMENT VILLAGES ACT 1986 - SECT 3
Definitions
(2) If—
(a) under Part 6 a resident may vote at an annual meeting; and
(b) that resident and another resident or other residents are jointly entitled (whether as joint tenants or tenants in common) to share accommodation at a retirement village—
the right to vote conferred by that Part may be exercised by one only of those residents and, if those residents disagree as to which of them is to exercise the right to vote, the resident whose name appears first on the residence contract conferring the joint residence right may exercise the right to vote.


This provides protection for single retirement village residents in that their voting power on important matters is no less than a couple.


However when it comes to an increase in village fees beyond an increase in the rise of the Consumer Price Index, Section 38.4 of the Act allows a vote of couples to be double the voting power of a single resident.


RETIREMENT VILLAGES ACT 1986 - SECT 38 Increases in maintenance charges
  1. Subsection (2) does not apply if the payment of a maintenance charge that is greater than the adjusted maintenance charge has been approved by resolution of a majority of the residents at a meeting of the residents or is approved by resolution of the residents committee.
Section 38.4 either by design or default is allowing village operators to work around a protection afforded single residents by Part 2 of Section 3 of the Act the Definitions. The lived experience being operators present to the body of village residents Section 38.4 alone without Section 3. The words 'residents' and 'meeting' in their stand alone literal meaning can easily be interpreted as removing any voting power protection for single residents. The legislation may in fact be designed to produce this result but if so it contains a gross unfairness for single retirement village residents.



In the interest of improved financial protections for single retirement village residents consideration should be given to amending Section 38.4 to read -
  1. Subsection (2) does not apply if the payment of a maintenance charge that is greater than the adjusted maintenance charge has been approved by resolution of a majority of the residences voting at an annual general meeting of the residents or is approved by resolution of the residents committee.
It may be argued that the voting power of single residents are still protected by the definitions in Section 3 of the Act despite the wording of Section 38.4, that the use of the words 'residents' and 'meeting' in Section 38.4 are just a general reference. Clarity in the law however is just as desirable as clarity in any contract.
Please give serious consideration to amending Section 38.4 by the removal of the words 'residents' and 'meeting' to be replaced by the phrase 'residences voting at an annual general meeting'. Single retirement village residents should have identical voting power to couples particularly on matters that can have a negative financial impact upon them.


Thank you,

Les Scobie,"

Concern Over Retirement Village Special Levy.

Retirement Village reform advocate Les Scobie has written to the responsible minister expressing concern over a lack of clarity in the legislation as to the capacity of a village operator to impose a special levy where there has been an over spend on the maintenance budget.

"The Hon. Marlene Kairouz,
Minister for Consumer Affairs,
Level 16, 121 Exhibition Street,
Melbourne. Vic. 3000.

Dear Minister,

Re:- Need for amendment to Section 38(1a) of the Retirement Villages Act 1986, lack of legislative protection for retirement village residents from a 'special levy' where a village operator fails to properly control the spending of the maintenance budget.

In Section 38.1 of the Retirement Villages Act 1986 a 'special levy' is defined as -

RETIREMENT VILLAGES ACT 1986 - SECT 38

Increases in maintenance charges
(1) In this section—
"special levy" means a payment which is made by a resident to the owner or manager and which is not—
(a) a maintenance charge;

Poor protection for residents comes from the lack of clarity in the words 'a maintenance charge' rather than say 'maintenance charges'.

Village operators can hide behind this lack of clarity in the Act to enable careless, undisciplined or deliberate over spending of the maintenance budget, they then have the capacity of using a 'special levy' to support this spending. Whether this budget overrun has come about by design or by circumstance, the use of a 'special levy' in this way brings an increased financial burden upon residents.

Operators claim the words 'a maintenance charge' means a special levy cannot be a category of a proposed maintenance budget as opposed to a special levy cannot be used for an overrun in maintenance charges. The legislation may in fact have been designed to produce this result but if so it contains a gross unfairness for financially vulnerable residents. It grants village operators a virtual 'blank cheque' spending environment despite the setting of a budget. Any legislative controls in Section 38 of the Act, Increases in Maintenance Charges beyond CPI, to protect residents are totally negated if the operator can come back at the end of the year and simply impose a 'special levy'.

In a modern retirement village contract operators insert the following example from an actual contract -
Clause 23.2 - If the total Maintenance Charges (for any one Financial Year) collected from all the residents of the Village is insufficient to cover the operating costs for that Financial Year (“shortfall”), the Manager may impose a special levy to cover the cost of the shortfall under Section 38.6 of the Act.

Section 38.6(b)(iii) then contains the following -

RETIREMENT VILLAGES ACT 1986 - SECT 38

Increases in maintenance charges
(1) In this section—
(6) Despite anything to the contrary in a residence contract, a management contract or the by-laws, a resident is not required to pay a special levy unless—
6(b)(iii) the residence contract, the management contract or the by-laws provided that the residents are responsible for the expenditure or the class of expenditure which the special levy is intended to cover.

There is no room here to discuss the complexity of the pressures upon each and every village resident to support the imposition of a special levy, in effect simply rewarding an operator for careless, undisciplined or deliberate over spending.

Consideration should be given to amending Section 38.1 to read -
Increases in maintenance charges
(1) In this section—
"special levy" means a payment which is made by a resident to the owner or manager and which is not—
(a) maintenance charges;

Clarity in the law is as important as clarity in the contract.

Please give serious consideration to amending Section 38.1 by the removal of the words 'a maintenance charge' to be replaced by the words 'maintenance charges'.

Thank you,

Les Scobie,"

Monday, 23 September 2019

Government Publication Has Capacity to Mislead

Victorian retirement village resident raises with Minister for Consumer Affairs Marlene Kairouz the matter of a publication of the department 'Guide to buying and living in a retirement village' that has material which is false, misleading or has the capacity to mislead.


"I wish to raise the issue of statements that have the 'capacity to mislead' consumers made in the booklet downloadable from the Consumer Affairs web site. The booklet being - Guide to choosing and living in a retirement village.


There are three major points of concern all with the capacity to mislead consumers are -


Page 15 - Deferred Management Fee "how not-for-profit villages improve their services or subsidise maintenance charges". There is nothing in the Retirement Villages Act 1986 that requires an operator to do this, in fact they can and do contract away from it by including a statement in the contract of occupation that Deferred Management Fees are 'for their own use absolutely'. The statement in the booklet is simply not true in every case and clearly has the 'capacity to mislead' consumers.


Page 17 - Capital Gains - The statement that 'most contracts share any capital gain between the resident and the village owner' has the 'capacity to mislead' consumers as the use of the word 'most' is simply not true. Industry data has shown that only 41% of Australian village contracts share capital gain. It is difficult to imagine Victoria is completely isolated from this industry ratio.


Page 21 - Auditing of Financial Statements - The statement "the financial statement must be audited. unless residents have agreed by special resolution" - Operators can and have applied for exemption to this mandate under - Section 6 of the Act – (1) Any religious or charitable organization may apply to the Director to have the organization declared an exempt organization for the purposes of all or any of the provisions of this Act. The statement on page 21 of the booklet has the 'capacity to mislead' consumers as the statement is simply not true in every case.


All three issues above relate to material that is false, misleads or has the capacity to mislead retirees when it comes to selecting an individual retirement village or the sector itself.


I was deeply disappointed and saddened by an initial reply on the matter- “The Guide itself contains a clear disclaimer that information which it contains about the law may be expressed in general statements so as to avoid the use of technical legal language.”


I do not seek more 'technical legal language', simply accuracy which would remove the capacity to mislead. Rather than fix the issue the department seems to simply hide behind the disclaimer, to me this is simply not good enough from a government department.


The ACCC is very clear as to corporate responsibility when it comes to misleading statements and I see an even greater responsibility for governments and government departments.


“It is illegal for a business to make statements that are incorrect or likely to create a false impression. It does not matter whether a false or misleading statement was intentional or not”


It is the role of government to enable a commercial environment for the retirement village industry, but it is surely not the role of government to contribute to mis-information which can be at the direct financial benefit of operators whilst at the direct financial and emotional cost of Victorian retirees.


In the interest of Victorian retirees the document should be amended to remove the misleading or capacity to mislead components.

• The statement in the booklet, Page 15 - Deferred Management Fee "how not-for-profit villages improve their services or subsidise maintenance charges" is simply not true in every case. Without the need for any technical legal language the statement should be amended to read for example "how some not-for-profit villages may improve their services or subsidise maintenance charges" .

• Page 17 - Capital Gains - The statement that 'most contracts share any capital gain between the resident and the village owner' is simply not true. Industry data has shown that only 41% of Australian village contracts share capital gain. Without the need for any technical legal language the statement should be amended to read for example ' some contracts may share any capital gain between the resident and the village owner' .

• Page 21 - Auditing of Financial Statements - The statement "the financial statement must be audited. unless residents have agreed by special resolution" is simply not true in every case. - Operators can and have applied for exemption to this mandate under Section 6 of the Act. Without the need for any technical legal language the statement should be amended to read for example "the financial statement must be audited unless residents have agreed by special resolution, some organisations however can be granted an exemption."

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Function of Government

The role of government is to create an environment for commerce to function whilst at the same time protecting retirees and particularly vulnerable retirees from both financial and emotional harm emanating from that function.

The Victorian Retirement Villages Act 1986 provides the environment for commerce to function but fails to fully protect retirees from financial and emotional harm as a result of it.

The Victorian legislative definition of a retirement village in demanding the payment of an 'in-going' amount without the transfer of property ownership is a major contributor to that financial and emotional harm suffered by retirees.


retvill.net

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