A recent Commercial and Consumer Tribunal decision reinforces the meaning and requirement of listing expenditure involved in providing each general service under the provisions of the Retirement Villages Act 1999 (RV Act).

The decision in the matter of Mayes v. Queensland Villages (Samford Grove) Pty Ltd, delivered on 3 August 2009, also discusses whether the cost of work on a television system servicing the village was properly charged to the maintenance reserve fund.

The parties had agreed that there were no contentious issues of fact and that the matter could be determined on the papers.

Issues considered by the Tribunal

The Tribunal was required to consider the level of detail needed in quarterly statements about general services expenditure.

In considering this issue, the Tribunal had regard to the definition of ‘general services’ in the RV Act, and the wording in section 112(2) (b) of the Act. The Tribunal initially commented that it was unclear whether the words, “list … the expenditure involved in providing each general service” means a list of the total expenditure for each general service category, or a list of the expenditure on each of the component items of a particular general service category.

The Tribunal also gave consideration to the extent to which the RV Act allows an operator of a village to exercise discretion to group individual general services expenditures into reasonable categories.

In addition to considering the issue of listing general services, the Tribunal was also required to consider the detail an operator needs to give about the maintenance reserve fund (MRF) and the capital replacement fund (CRF) when providing quarterly statements.

The other issue to be considered by the Tribunal was whether works carried out to the television system at the village had been properly charged to the MRF.

Findings of the Tribunal

With respect to the detail and grouping of general services in quarterly statements, the Tribunal held:

• that in referring to sections 106 and 107 of the RV Act, that based on the detail required in these provisions, it appears Parliament had contemplated that each separate ’general service’ should be narrowly defined and that an operator should not have the sole discretion to group together a broad conglomerate of costs.
• village accounts must separate those items of expenditure which can be increased under section 107 from those items of expenditure that need resident approval under section 106 for an increase beyond the Consumer Price Index.
• the village needed to recast its quarterly statements for the relevant years in respect of general services expenditure to list section 106 and 107 items as separate line items.

In regard to the level of detail required in listing the income and expenditure from the MRF and the CRF, the Tribunal held that the items of expenditure must be listed in a manner that allows residents to identify expenditure as having been properly paid from the relevant fund. The Tribunal was not satisfied that the operator had provided only a total figure for each of the CRF income and expenditure, and the MRF income and expenditure.

The Tribunal also determined that the work carried out to the television system network amounted to the provision of capital items and the substitution of existing equipment, and as such should have been charged to the CRF and not the MRF.

How this affects retirement village operators

This decision is a reminder to retirement village operators of the need to provide sufficient detail of expenditure in providing each general service, and that the accounts must separate those items of expenditure which can be increased under section 107 from those items of expenditure that need resident approval under section 106 for an increase beyond the CPI.

A copy of the full decision can be found at www.tribunals.qld.gov.au/RV/rvDecisions.shtm

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