Part 7 Financial management of retirement villages
91 Financial year of retirement village
(1) The operator of a retirement village is to determine a financial year for the village.(2) The financial year must be a period of 12 months commencing and ending on dates determined by the operator.
Division 2 Capital replacement
92 Responsibility for capital replacement
(1) The operator of a retirement village must bear any costs of depreciation and capital replacement in the village, except as this Division otherwise provides.(2) The operator of a retirement village must not fund any costs of depreciation or capital replacement from the recurrent charges payable by a resident in the village except as provided by section 94.
93 Operator not liable for replacement of certain items of capital
(1) The operator of a retirement village is not required to bear any costs of depreciation or capital replacement in respect of any item of capital:(a) that is owned by a resident of the village, or(b) that comprises residential premises the refurbishment of which:(i) is the responsibility of a resident of the village under the resident’s residence contract (as referred to in section 165), or(ii) is necessary because of wilful damage or wear and tear in excess of fair wear and tear (as referred to in section 163).(2) Neither the operator nor the residents of a retirement village is required to bear any costs of capital replacement in respect of any item of capital:(a) that is association property under a community land scheme or common property under a strata scheme, or(b) that is subject to a company title scheme.Note. The relevant association under the Community Land Management Act 1989, the owners corporation under the Strata Schemes Management Act 1996 and the relevant company, respectively, are liable for the capital replacement of the items of capital referred to in subsection (2).
94 When residents may be charged for capital replacement
(1) The operator of a retirement village may fund capital replacement and depreciation in the village from the recurrent charges payable by a resident of the village, but only if no ingoing contribution is payable by the resident.(2) However, even if an ingoing contribution is payable by any of the residents, the operator may fund from the recurrent charges the capital replacement and depreciation of (or the purchase of new) non-fixed items of capital in the village.Note. A village bus is an example of a non-fixed item of capital in a retirement village.(3) Further, if the residents by special resolution request the operator to provide an item of capital that the village does not already possess, the operator may fund the provision of that item from the recurrent charges.Note. A swimming pool might be an item of capital that a retirement village does not already possess.(4) Any amount that the operator proposes to expend, or set aside for the purposes of expending, under this section must be itemised in the statement of proposed expenditure.
95 Establishment of capital replacement fund
(1) This section applies only if the operator of a retirement village represents in any promotional material, disclosure statement or village contract for the village that he or she allocates a specified proportion of ingoing contributions or departure fees (or both) for the purpose of financing depreciation and capital replacement in the village.(2) The operator of the retirement village must establish and maintain a capital replacement fund for the village.Maximum penalty: 100 penalty units.
(3) The operator is not to hold money in the fund otherwise than in an account with an authorised deposit-taking institution or by way of an investment as provided by this section.Maximum penalty: 100 penalty units.
(4) Money in the fund may be invested in any manner permitted by law for the investment of trust funds.(5) Any interest received on an investment under this section forms part of the fund.
96 Payment out of capital replacement fund
The operator must not pay any money from the capital replacement fund for the village for any purpose other than the purpose of capital replacement in the village.Maximum penalty: 100 penalty units.
(1) The operator of a retirement village must insure the village (and keep it insured) in accordance with this section.Maximum penalty: 100 penalty units.
(2) The village is to be insured to full replacement value.(3) Insurance required by this section:(a) must cover the following:(i) damage,(ii) costs incidental to the reinstatement or replacement of insured buildings,(iii) public liability, and(b) must provide for the reinstatement of property to its condition when new.(4) The regulations may specify the minimum amount of public liability insurance required under this section.(5) This section does not apply in respect of the part (if any) of a retirement village that is subject to a community land scheme, company title scheme or strata scheme.Note. Insurance of property subject to company title is the responsibility of the relevant company. Insurance of a building or structure on association property in a community land scheme, and of common property in a strata scheme, is the responsibility of the relevant association and the owners corporation, respectively.
98 Operator not obliged to buy items of capital
Nothing in this Act prevents the operator from complying with any requirement to bear the costs of capital replacement under this Division by leasing the item of capital concerned or obtaining it under a hire-purchase arrangement.
Division 3 Capital maintenance
99 Operator to maintain items of capital
(1) The operator of a retirement village must maintain items of capital in the village in a reasonable state of repair, having regard to the following:(a) the age of the village,(b) its prospective life,(c) the amount of ingoing contributions, recurrent charges and departure fees payable by the residents,(d) the amount of money available to be used for the purpose of maintenance in accordance with the statement of approved expenditure.(2) Subsection (1) does not apply in respect of any item of capital:(a) that is owned by a resident of the village, or(b) that is association property under community land scheme or common property under a strata scheme, or(c) that is subject to a company title scheme, or(d) to the extent that the item of capital requires repair because of damage (fair wear and tear excepted) caused by a resident of the village or a tenant or invitee of the resident.Note. Maintenance of association property in a community land scheme and common property in a strata scheme is the responsibility of the relevant association and the owners corporation, respectively, for the scheme.(3) A resident of a retirement village who is of the opinion that the operator is not carrying out the works necessary for the maintenance of items of capital in the village in accordance with the statement of approved expenditure may apply to the Tribunal for (and the Tribunal may make) an order directing the operator to carry out (or cause to be carried out) specified works of maintenance within the time specified in the order.
100 Maintenance fund for long-term maintenance of items of capital
(1) If a statement of approved expenditure provides for the setting aside of a proportion of recurrent charges for the purpose of financing repairs and maintenance of items of capital in a period that extends beyond the financial year to which the statement of approved expenditure relates, the operator of the retirement village must establish and maintain a maintenance fund for the village.Maximum penalty: 100 penalty units.
(2) However, this section does not require a separate fund to be established in respect of each financial year.(3) The operator is not to hold money in the fund otherwise than:(a) in an account with an authorised deposit-taking institution, or(b) by way of an investment as provided by this section, or(c) as otherwise prescribed by the regulations.Maximum penalty: 100 penalty units.
(4) Money in the fund may be invested in any manner permitted by law for the investment of trust funds.(5) Any interest received on an investment under this section forms part of the fund.
101 Payment into maintenance fund
There is to be paid into the maintenance fund by the operator:(a) such proportion of recurrent charges as may be required by the statement of approved expenditure, and(b) all money received by way of settlement or other discharge of insurance claims made in respect of any matter referred to in section 97 (3) (a) (i) or (ii) that is not used for the purposes of repairing damage or meeting costs incidental to the reinstatement or replacement of insured buildings.
102 Payment out of maintenance fund
An operator of a retirement village must not pay any money from the maintenance fund for the village for any purpose other than:(a) the purpose of repairs and maintenance of items of capital in the village, or(b) a purpose prescribed by the regulations.Maximum penalty: 100 penalty units.
103 Operator to pay certain recurrent charges
(1) The operator of a retirement village must pay, in relation to any new residential premises in the village, an amount equivalent to the recurrent charges for general services payable under a village contract in respect of comparable (or the most nearly comparable) premises in the village.(2) In this section, new residential premises means residential premises that are not and have never been the subject of a village contract.
104 Variation of recurrent charges
(1) A village contract may provide that any recurrent charges payable under it:(a) are to be varied at specified intervals (or on specified dates) according to a fixed formula (for example, in proportion to variations in the Consumer Price Index), or(b) may be varied at specified intervals (or on specified dates) otherwise than according to a fixed formula.(2) If a village contract provides that recurrent charges payable under it are to be varied (or may be varied) without specifying when they are to be varied (or may be varied), the second and any subsequent purported variation in any period of 12 consecutive months is of no effect.(3) A village contract must not provide for more than one method of variation of the recurrent charges payable under it.(4) If a village contract provides for more than one method of variation of recurrent charges in contravention of subsection (3), the method that results in the lowest increase in recurrent charges is the applicable method.
105 Recurrent charges varied by fixed formula
(1) If a village contract provides that recurrent charges are to be varied according to a fixed formula, the operator of the village must give at least 14 days’ written notice of the variation to the resident concerned.(2) The notice must specify:(a) the amount of the new recurrent charges, and(b) the date from which the new recurrent charges are payable, and(c) such other information as may be prescribed by the regulations.(3) A resident of the retirement village who is a party to a village contract referred to in subsection (1) is not required to pay any increase in his or her recurrent charges until notice of the increase is given as required by this section.(4) The operator of a retirement village must not increase (or attempt to increase) recurrent charges that are to be varied according to a fixed formula otherwise than in accordance with that formula and this section.Maximum penalty: 50 penalty units.
106 Recurrent charges varied otherwise than by fixed formula
(1) If a village contract provides that recurrent charges are to be varied otherwise than according to a fixed formula, the operator of the village must give at least 60 days’ written notice of any proposed variation to the resident concerned.Note. A provision to the effect that recurrent charges may be varied by “up to” a certain percentage is an example of such a provision.(2) The notice must:(a) specify the amount of the proposed recurrent charges, and(b) specify the date from which it is intended that the proposed recurrent charges are to be payable, and(c) contain a brief explanation of the reasons for the variation, and(d) state that the variation will not take effect unless the residents concerned consent to the variation or the Tribunal orders that it take effect, and(e) contain such other information as may be prescribed by the regulations.(3) A notice given under this section may be cancelled by a later notice or a later notice may provide for a lesser increase than the increase (if any) specified in the earlier notice.(4) For the purposes of the date from which the proposed variation is to take effect, a later notice is taken to have been given on the date on which the earlier notice was given.(5) However, the period of 30 days specified in section 107 (2) commences, in relation to a later notice, on the date on which the later notice is actually given.(6) An operator who is the operator of more than one retirement village must deal with each village separately under this section.(7) The operator of a retirement village must not increase (or attempt to increase) recurrent charges that are to be varied otherwise than according to a fixed formula:(a) beyond any upper limit specified in the relevant village contract, or(b) otherwise than in accordance with this section.Maximum penalty: 50 penalty units.
107 Residents’ consent to variation
(1) A variation does not take effect under section 106 unless:(a) the residents whose recurrent charges will be affected by the variation consent to the variation, or(b) the Tribunal orders under section 108 that the variation take effect.(2) The residents concerned must, within 30 days after receiving a notice under section 106:(a) meet, consider and vote on the proposed variation, and(b) advise the operator that they consent, or do not consent (as the case may be) to the variation.(3) If the operator is not advised as required by subsection (2) (b), the residents are taken to have refused consent to the variation.(4) The operator must provide such information in relation to the proposed variation 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 variation.
(1) If the residents of a retirement village whose recurrent charges will be affected by a proposed variation of those charges do not consent to the proposed variation, the operator may apply to the Tribunal for an order in respect of the proposed variation.(2) The Tribunal may, on application by the operator:(a) order that the proposed variation is to take effect, with or without modification, or(b) order that the proposed variation is not to take effect.(3) An order under subsection (2) (a) may:(a) specify the date from which the variation is to take effect (which may be a date other than the date specified by the operator in the notice given under section 106), and(b) order that the recurrent charges are not to be further varied for a specified period, being a period that does not exceed 12 months.(4) In determining an application made under this section, the Tribunal may have regard to the following:(a) the general market level of recurrent charges paid at similar retirement villages in the locality of the retirement village concerned or a similar locality,(b) the level and cost of services and facilities provided for in the statement of proposed expenditure or approved expenditure (as the case may be),(c) any proposed variations (including additions) to those services and facilities, being variations to which the residents have consented,(d) the cost of general services required to be provided by the operator,(e) the frequency and amount of past variations of the recurrent charges,(f) if the retirement village is subject to a community land scheme or strata scheme—the amounts of levies and other contributions payable by the residents under the Community Land Management Act 1989 or the Strata Schemes Management Act 1996,(g) any other relevant matter.
109 Tribunal may order refund of recurrent charges in certain circumstances
(1) 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.(2) The Tribunal may make an order directing a refund of all such overpaid recurrent charges.(3) An application under this section must be lodged no later than 12 months after the increase in the charges came into effect.
110 Receipts for recurrent charges
(1) If payment of recurrent charges in a retirement village is made in person, any person who receives the payment must, without delay, give to the person making the payment a receipt for the payment.Maximum penalty: 5 penalty units.
(2) If the payment is not made in person, the operator of the village must, as soon as practicable after receipt of the payment, prepare or cause to be prepared a receipt for the payment and make the receipt available for collection by the resident concerned or give it to the resident.Maximum penalty: 5 penalty units.
(3) A receipt for payment of recurrent charges is not a receipt for the purposes of this section unless it includes the following particulars:(a) the name of the operator,(b) the name of the resident paying the recurrent charges (or on whose behalf they are paid),(c) the address of the residential premises concerned,(d) the period for which the recurrent charge is paid,(e) the date on which the payment is received,(f) the amount of the payment.(4) This section does not apply to recurrent charges paid in accordance with an agreement between the resident and the operator into an account at an authorised deposit-taking institution nominated by the operator.
111 Abatement of recurrent charges
(1) If residential premises in a retirement village are, otherwise than as a result of a breach of a village contract, destroyed or rendered wholly or partly uninhabitable or cease to be lawfully usable for the purpose of a residence or are appropriated or acquired by any authority by compulsory process, the recurrent charges payable by the resident of the premises abate accordingly.Note. The operator or the resident may also seek to terminate the residence contract in these circumstances (unless the resident owns the residential premises concerned)—see section 132.(2) If the operator and the resident do not agree that the recurrent charges should abate under this section (or do not agree on the extent to which they should abate), either party may apply to the Tribunal for (and the Tribunal may make) an order declaring that the recurrent charges:(a) are not to abate, or(b) are to abate to the extent specified in the order from the date so specified.
Division 5 Annual statements of proposed and approved expenditure
112 Statement of proposed expenditure
(1) At least 60 days before the commencement of each financial year of a retirement village, the operator of the village must supply each resident of the village with a statement of proposed expenditure 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 statement in relation to any 2 or more of the villages concerned, but, when providing the statement to the residents and former occupants of a particular village, must include a separate statement for that village.(3) The regulations may make provision for or with respect to:(a) matters that must be dealt with in a statement of proposed expenditure, and(b) matters that must not be financed by way of recurrent charges, and(c) the form that the statement is to take.(4) The statement 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 statement, 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 statement.(6) Nothing in this section prevents an operator of a retirement village from cancelling a statement of proposed expenditure and replacing it with an amended statement at any time.
113 Order for statement of proposed expenditure
If the operator of a retirement village does not supply a statement of proposed expenditure 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 statement.
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 statement of proposed expenditure.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 statement.(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 statement of proposed expenditure (or an amended statement):(a) meet, consider and vote on the statement, and(b) advise the operator that they consent, or do not consent (as the case may be) to the statement, and(c) if they do not consent to the statement—specify the item or items in the statement to which they object.(5) If the operator is not advised as required by subsection (4) (b), the residents are taken to have refused consent to the statement.(6) If the operator fails to seek the consent of the residents, the residents are taken to have refused consent to the statement.(7) An operator who is the operator of more than one retirement village must deal with each village separately under this section.
115 Determination of expenditure by Tribunal
(1) If the residents of a retirement village refuse consent to the expenditure itemised in the statement of proposed expenditure, the operator or a resident may apply to the Tribunal for an order in respect of the expenditure proposed for the financial year concerned.(2) If an application is made under this section, the Tribunal may do one or more of the following:(a) make interim orders allowing expenditure on all items in the statement of proposed expenditure other than those specified under section 114 (4) (c),(b) give procedural directions to the parties to facilitate agreement between the parties concerning the proposed expenditure (including directions to prepare new costings for services and to meet and discuss disputed matters),(c) make recommendations to the parties about the proposed expenditure (including recommendations about the cost and type of the services to be provided),(d) order that the expenditure is to be as itemised in the statement of proposed expenditure,(e) order that there is to be no expenditure, or reduced or increased expenditure, on any particular item in the statement of proposed expenditure,(f) order that there is to be expenditure in a specified amount on an item that does not appear in the statement of proposed expenditure,(g) order that the expenditure is to be as specified in the order,(h) determine liability for expenses (if any) incurred from the commencement of the financial year to which the statement of proposed expenditure relates until the date on which an order under paragraph (d), (e), (f) or (g) is made,(i) make any other order prescribed by the regulations for the purpose of this section.(3) If:(a) the operator makes an application under this section, and(b) the Tribunal does not, before the commencement of the financial year to which the statement of proposed expenditure relates, make an order that gives rise to a statement of approved expenditure,the operator may, until the Tribunal makes the relevant order, expend money received by way of recurrent charges to meet the reasonable and necessary costs of operating the village.(4) In determining an application made by the operator under this section, the Tribunal may review any expenditure made under subsection (3) and may order that the operator is liable for so much of that expenditure as it considers was not reasonable or necessary.(5) If the Tribunal gives directions or makes recommendations for further action under subsection (2), it may adjourn the proceedings for a report from the parties and, if necessary, take further action under subsection (2) when proceedings resume.(6) In determining an application made under this section, the Tribunal may have regard to the following:(a) the reasonable cost of services provided (or proposed to be provided) in the village,(b) the need for the services to be provided in the village,(c) any other relevant matter.(7) If the Tribunal receives an application under this section at the same time as (or while there is before it) an application under section 108 in relation to recurrent charges payable at the same retirement village, it must make a determination under this section before making a determination under section 108.
116 Expenditure to be in accordance with statement of approved expenditure
(1) If the residents of the village consent to the expenditure itemised in the statement of proposed expenditure, or the Tribunal orders that the expenditure is to be as itemised in that statement, the statement of proposed expenditure is taken to be a statement of approved expenditure.(2) However, if the Tribunal makes any other order in relation to the statement of proposed expenditure, the statement of approved expenditure is taken to be that statement modified to accord with the order.(3) The operator must not expend money received by way of recurrent charges otherwise than in accordance (apart from minor variations) with the statement of approved expenditure or any amendment authorised under section 117.Maximum penalty: 100 penalty units.
(4) If the operator:(a) contravenes subsection (3), or(b) did not (despite any order of the Tribunal under section 113) supply a statement of proposed expenditure in respect of a current financial year,a resident may apply to the Tribunal for (and the Tribunal may make) an order directing the operator to refund the recurrent charges paid by the resident during so much of the financial year as has passed at the time the order is made.
117 Amendment of statement of approved expenditure
(1) The operator may seek the consent of the residents to amend the statement of approved expenditure.(2) If the residents consent to the amendment, the operator is authorised to expend money in accordance with the amended statement of approved expenditure.(3) If the residents do not consent to the amendment, the operator may apply to the Tribunal for an order approving the amendment. If the Tribunal makes such an order, the operator is authorised to expend money in accordance with the amended statement of approved expenditure.(4) In the case of an amendment that relates to further expenditure, the Tribunal is not to make an order under subsection (3) unless the Tribunal is satisfied that:(a) there is an urgent need for the further expenditure, and(b) the further expenditure was not reasonably foreseeable when the statement of proposed expenditure was approved under section 116.
(1) The operator of a retirement village must ensure that the accounts for the village are audited annually by a person qualified to audit accounts for the purposes of the Corporations Act 2001 of the Commonwealth.Maximum penalty: 50 penalty units.
(2) If the audit fees are to be paid by the residents of the village:(a) the fees must be itemised in the statement of proposed expenditure, and(b) the item must include the name of the auditor to be appointed, and(c) the residents’ consent to that appointment is required in the same way as it is required for the expenditure of the fees concerned.(3) The operator of the retirement village must also give the Residents Committee copies of quarterly accounts of the income and expenditure of the village.(4) If there is no Residents Committee established for the village, a copy of the quarterly accounts must be given to any resident who requests one.(5) The quarterly accounts are not required to be audited.
119 Copies of audited accounts to be provided to residents
(1) Within 4 months 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 any capital replacement fund or maintenance fund,(ii) details of the balances in any capital replacement fund or maintenance fund,(iii) details of amounts received for insurance claims made in respect of any matter referred to in section 97 (3) (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 statement of proposed expenditure.(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) However, if there is no Residents Committee in the village concerned, the copies of the accounts are to be provided to each resident.
120 Any surplus or deficit to be carried over
Any surplus or deficit in the annual accounts of a retirement village is to be carried forward to the next financial year, unless the residents of the village consent, by means of a special resolution:(a) to the expenditure of the surplus, or(b) to the making good of the deficit by way of a special additional payment from the residents,as the case may be.