Replacement and Repair Responsibilities in QLD Retirement Villages

Replacement and repair responsibilities in Qld Retirement Villages

Replacement and repair responsibilities are always hotly discussed and debated topics in retirement villages.  Over a decade on, the 2009 decision of Jomal[1] remains relevant law when considering the question of whether it is the retirement village operator or the resident who bears the ultimate responsibility for repair and maintenance of items in retirement villages… even when those items are items are fixtures that are not owned by a resident.

The Court held the residents in Jomal were responsible for the replacement of the items in question because of the terms of the standard form residence contract that was entered into.  That is, the Court was not prepared to diminish the residents’ contractual responsibilities.

To achieve this outcome, there were multiple hearings over an extended period of time.  In addition, the dispute caused both sides to incur significant expenses, untold stress, extreme tension in the community and an erosion of village goodwill.

Over a decade later, confusion continues to reign supreme in the field of maintenance as disputes are becoming more prevalent in this field.  To avoid a Jomal outcome, both the resident and the scheme operator are well advised to learn from history.  It is imperative that operators are crystal clear about how their agreements deal with maintenance and replacement.  Marketing campaigns about ‘relaxing’ and ‘not having to worry about the big home’ are appealing, but can fuel the fire of confusion.  Conversely, residents should actively participate in the entry process – ask relevant questions, get good advice and consciously decide if the outcome is acceptable to them and their future situation.  If either residents or scheme operators fail to take action, there is a risk of government intervention, which could potentially diminish the freedom of both parties to contract.

The Jomal Case
The original dispute revolved around the replacement of anodes of hot water heaters which were fixtures in the residents’ units. The residents of the village argued that the costs of replacing the anodes should be funded from the maintenance reserve fund (MRF). The Retirement Village Act 1999 (Qld) (the Act) requires a retirement village operator to establish and keep a maintenance reserve fund for maintaining the repairing the retirement village’s capital items. It is the residents who are solely responsible for contributing to the MRF.

The resident’s contracts contained a particular clause, whereby the resident agreed to “regularly maintain and properly repair or replace… any fixtures, fitting, equipment, appliances, furniture, furnishings, and other property in and on the Accommodation Unit that are made available by the Scheme Operator.” The residence contract also included a clause to the effect that the Scheme Operator was not required to repair or replace anything that was the responsibility of the resident.

At the first instance, the judge found in favour of the Scheme Operator, deeming the replacement of the anodes, by virtue of the signed residence contracts, to be the responsibility of the individual residents.

The residents appealed the decision arguing the anodes were capital in nature and expressed concerns if the Supreme Court were to uphold the decision, this could lead to operators offering contracts to residents which could seek to impose heightened responsibility on residents to not only replace fixtures and fittings in and on the Accommodation Unit but also other buildings and structures, rendering the MRF with “little to do”.  The residents also expressed concerns that the initial decision by the Supreme Court was not in line with the Act’s consumer protection provisions.

In response, the Court of Appeal once again found in favour of the Scheme Operator. Importantly the Court found the definition of ‘capital’ items in the Act is drafted to expressly contemplate agreements whereby the residents will be responsible for the maintenance of capital items owned by the Operator (which was contemplated by the resident’s agreement). The definition included all buildings and structures…owned by the operator, “other than items that, under the residence contract, are to be maintained, repaired and replaced by the resident.”

The Court also noted that there was no requirement present under the Act which required the operator to pay for the replacement of appliances, such as anodes, from the MRF. In response the Judge also stated it would be very unlikely that residents would voluntarily sign a contract that required them to replace key buildings and structures.

Conclusion
In making its judgment the Court considered the Act’s purpose to achieve a balance between consumer proception and the growth of the retirement village industry, however ultimately considered the residence contract to be indicative of the residents’ requirement in relation to the replacement of the anodes.

Freedom of contract is a truly beautiful thing.  While it exists, we will have the privilege of choice from an expansive array of villages that sit along a service spectrum.  At one end there are villages which genuinely do take care of every last thing – from changing the batteries in the remote to providing comprehensive care services.  At the other end, there are the village whose operator who simply mows the common property lawns and otherwise offers a ‘light touch’ where residents live a life of true independence.

If operators do not offer transparency in this field, or if residents do not undertake proper due diligence, the regulator and policy makers may very well step in, thus diminishing the freedom of contract.

[1] Jomal P/L v Commercial and Consumer Tribunal & Ors [2009] QCA 326