KEYTON HOLDING PTY LTD [2024] SASC 66

Applicant: KEYTON HOLDING PTY LTD Counsel: MR B DOYLE KC AND MR B LODGE - Solicitor: MINTER ELLISON Interested Party: MINISTER FOR HEALTH AND WELLBEING Counsel: MR S RANIERI - Solicitor: CROWN SOLICITOR (SA) Hearing Date/s: 27/03/2024, 28/03/2024 File No/s: CIV-23-011141 A SUPREME COURT OF SOUTH AUSTRALIA (Civil: Application) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment 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 in which it was generated. KEYTON HOLDINGS PTY LTD [2024] SASC 66 Judgment of the Honourable Justice McIntyre 21 May 2024 REAL PROPERTY - RETIREMENT VILLAGES The applicant operates a Retirement Village Scheme; the Townsend Park Retirement Village and wishes to excise a portion of land from the Scheme, proposed allotment 101, in order to facilitate the construction of an aged care facility on that allotment. The applicant seeks orders under s 58 of the Retirement Villages Act 2016 (SA) to either partially terminate the Scheme or, in the alternative, to terminate the entire Retirement Village Scheme on condition that there be established a new scheme operated by the applicant in respect of the land, except for the proposed allotment 101, with the residents’ contracts to continue, in effect, as though they were entered into under the new scheme. Held: The Court has the power to approve the partial termination of the Scheme and it is appropriate in these circumstances to exercise the discretion to permit partial termination of the Retirement Village Scheme. Retirement Villages Act 2016 (SA) ss 3, 4, 12, 13, 20, 21, 22, 24, 27, 37, 44, 56, 58, 59; Retirement Villages Act 1992 (WA) ss 3, 15, 17, 21, 22; Retirement Villages Act 1987 (SA); Real Property Act 1886 (SA), referred to. Retirement Care of Australia (Hollywood) Pty Ltd v Commissioner for Consumer Protection [2013] WASC 219, discussed. Brown v Commonwealth Bank of Australia (1993) 63 SASR 188, considered. -- 1 of 27 -- -- 2 of 27 -- KEYTON HOLDINGS PTY LTD [2024] SASC 66 Civil: Application 1 McINTYRE J: The applicant, Keyton Holdings Pty Ltd (‘Keyton’), operates a Retirement Village Scheme (‘Scheme’); the Townsend Park Retirement Village (‘Village’). Keyton wishes to excise a portion of land from the Scheme, proposed allotment 101, in order to facilitate the construction of an aged care facility on that allotment. Keyton seeks orders under s 58 of the Retirement Villages Act 2016 (SA)1 (‘the SA Act’) to either partially terminate the Scheme or, in the alternative, to terminate the entire Scheme on condition that there be established a new scheme operated by the applicant in respect of the land, except for the proposed allotment 101, with the residents’ contracts to continue, in effect, as though they were entered into under the new scheme. 2 The application raises a number of issues as follows: • Does the Court have the power to approve the partial termination of the Scheme? • If the Court does have power to approve a partial termination: • What factors are relevant to the exercise of the discretion? • Is it appropriate to exercise the discretion to permit partial termination of the Scheme? • If partial termination is not permitted, is it appropriate to order that the entire Scheme be terminated on the basis contended for by Keyton? 3 For the reasons that follow I find that the Court has the power to approve a partial termination of the Scheme under s 58 of the SA Act. I further find that it is appropriate in the circumstances of this matter to approve a partial termination to excise proposed allotment 101 from the Village. I will hear the parties as to the conditions that ought be imposed and the terms of the orders to be made. Background 4 The facts are not contentious and are established by the affidavit and other material tendered at trial. 5 The Village is located in the coastal surrounds of Hove. The Village currently comprises some 127 separate residences, community areas and open space. The residences consist of free-standing villas or independent living units (‘ILUs’) and independent living apartments (‘ILAs’). The number of residents 1 Retirement Villages Act 2016 (SA) (‘SA Act’). -- 3 of 27 -- [2024] SASC 66 McIntyre J 2 varies from time to time but as at 26 March 2024 there were 120 occupied residences and 171 residents.2 6 Prior to the purchase of the Village by Keyton, the former operator, Townsend House Inc, undertook four phases of development of the Village constructing:3 • ILUs 1 to 25 located at Samuel Johnson Close, known as ‘Stage 1’ in about 2003; • ILUs 26 to 49 located at Lawrence Barkham Court, known as ‘Stage 2’ in about 2004; • ILUs 50 to 61 located at John Rogers Circuit and ILAs 62 to 108, known as ‘Stage 3’ in about 2006 to 2007; and • ILUs 109 to 114 located at Harold Raymond Close, known as ‘Stage 4’ in about 2008. 7 Following Keyton’s acquisition of the Village in 2016, it constructed an additional 13 ILUs numbered 115 to 127 located at Townsend Drive known as ‘Stage 5’ between September 2017 and May 2018. 8 The Village has a total land size of 65,300m² including:4 • 852m² in community areas, which include a community building, alfresco activities area and Townsend House, a heritage building; • 20,508m² of open space, which includes caravan storage, a potting shed, a barbeque area and green space; and • 18,099m² in residential living, which comprises a three-storey apartment block and villas. There are 80 ILUs and 47 ILAs; a total of 127 residences. 9 The village land comprises four parcels of land. This includes the parcel of land that is the subject of these proceedings; certificate of title volume 5996, folio 444 being allotment 65 in deposited plan 74085 (‘allotment 65’).5 10 Keyton wishes to build a residential aged care facility adjacent to the Village.6 Keyton contends that the co-location of aged care facilities with a retirement village has a number of benefits. First, that residents, or partners of residents, have options for higher care in one location; and aged care operators can provide in 2 Exhibit A5 at [10]. 3 Exhibit A1; FDN 11 at [13]-[20]. 4 Exhibit A1 at 2250 at [3.3]. 5 Exhibit A1; FDN 2 at [17]-[18], SME-2, SME-3, SME-4. 6 Ibid at [10]-[13]. -- 4 of 27 -- [2024] SASC 66 McIntyre J 3 home care services to residents of retirement villages to assist those residents to remain in their homes for a longer period of time. 11 A vacant oval makes up the majority of allotment 65.7 Keyton views the oval as a suitable location for construction of a residential aged care facility. Accordingly, Keyton wishes to subdivide allotment 65 into two allotments, proposed allotment 101 and allotment 102. Proposed allotment 101 comprises the vacant oval and surrounds. The only improvements currently in place on the proposed allotment 101 are a gazebo and a barbeque area. If an aged care facility is built, Keyton proposes to demolish these improvements and to build a new gazebo and barbeque area in the community area located on the proposed allotment 102.8 12 The possible development of the vacant oval for the purpose of constructing a residential aged care facility has been the subject of discussion between Keyton and the Village residents’ committee since 2 February 2017.9 The residents’ committee has supported the development of the oval to include an aged care facility since at least December 2019.10 13 Following consultation with the residents’ committee, Keyton submitted a development application and obtained development consent to subdivide allotment 65 into two allotments on 4 April 2022.11 Keyton then entered into to a contract for sale of proposed allotment 101 on or about 28 September 2022, with an aged care facility operator, Arcare Pty Ltd as trustee of the ARC unit trust (‘Arcare’).12 The contract is conditional upon, amongst other things, the subdivision of allotment 65 and the removal of proposed allotment 101 from the Scheme. If these conditions are satisfied, Arcare must, under the contract of sale, construct a residential aged care facility on that allotment.13 14 Arcare is an established aged care operator. As at 27 October 2023, Arcare operated 51 residential aged care homes around Australia.14 If the sale of allotment 101 proceeds, Arcare intends to construct a single story, 118 bed residential aged care facility (‘proposed aged care development’) on the land. Arcare has obtained planning consent for that purpose.15 15 On 23 December 2022, Keyton applied to the Minister for Health and Wellbeing (‘the Minister’) under s 59 of the SA Act for the partial termination of the Scheme insofar as it relates to allotment 101. Between February 2023 and April 2023, the Office for Aging Well (‘the Office’) consulted with the residents 7 Exhibit A1; FDN 12 at [24]-[25]. 8 Exhibit A1; FDN 2 at [56]-[57], SME-15. 9 Exhibit A1; FDN 11 at [34], PEP-4. 10 Ibid at PEP-8. 11 Exhibit A1; FDN 2 at [46], SME-11. 12 Ibid at [50], SME-12. 13 Ibid at SME-12 at [5.5]. 14 Exhibit A1; FDN 21 at [5]-[7]. 15 Exhibit A1; FDN 2 at [52]-[53], SME-13. -- 5 of 27 -- [2024] SASC 66 McIntyre J 4 of the Village to ascertain their views about the partial termination of the Scheme. The information collected by the Office from the consultation process demonstrated that, as at April 2023, nine residents residing in seven ILUs and one ILA, out of a then total of 185 residents, did not support the partial termination of the Scheme.16 As one or more residents did not support the proposal, the Minister considered, correctly in my view, that he did not have power to partially terminate the Scheme under s 59 of the SA Act. Accordingly, Keyton has applied to the Court under s 58 of the SA Act. 16 The Minister is an interested party to these proceedings under s 58(2) of the SA Act. The Minister says that no resident wishes to take an active part in the proceedings. The Minister relies upon the matters set out in the affidavit of Ms Biermann17 which outlines the steps that the Minister took to determine the residents’ attitude to these proceedings. The reasons for not wishing to engage with these proceedings are varied and reasonable. I do not infer, from the lack of active participation in these proceedings, that the residents are disinterested in these proceedings. I accept that the Minister has ascertained the residents’ views as far as it is possible to do so and has accurately conveyed these to the Court. I further accept that Keyton has consulted with the residents and has properly informed the Court of the results of that consultation. 17 The Minister takes no position on the ultimate outcome of Keyton’s application, nor does the Minister seek to challenge the evidence upon which Keyton relies. The proposed aged care development 18 The details of the proposed aged care development are set out in exhibit A1.18 I accept that Keyton and Arcare have taken into account the feedback provided by Village residents in designing the development.19 19 The approved development plan dated 12 January 2023 contemplates that the proposed aged care development will have a number of features including:20 • It will be single storey with 118 beds; • it will include an underground carpark consisting of 63 underground carparking spaces with 0.55 carpark spaces per resident; • traffic will enter the underground carpark through designated access points from King George Avenue and not through the Village; 16 Exhibit A1; FDN 23 at [15]. 17 Exhibit A1; FDN 23. 18 Exhibit A1; FDN 2 at [55]-[57], SME-14, SME-15; FDN 21 at [10], [12], [15]-[16], [23], MDC-4. 19 Exhibit A1; FDN 2 at [58], [78]-[99], SME-21. 20 FDN 53 at [4]. -- 6 of 27 -- [2024] SASC 66 McIntyre J 5 • the main entrance will be on King George Avenue to enable visitors and essential services to access the aged care facility without travelling through the Village; • residents of the Village will have pedestrian access to the aged care facility by a separate rear entrance facing Townsend House; • on-site laundry and kitchen facilities will be incorporated to reduce the number of deliveries required to the site; • soft landscaping will be incorporated between the Village and the aged care facility and also at the King George Avenue frontage; • an acoustic wall adjoining the entry to the carpark and loading bay will be constructed to reduce noise that may disturb residents of the Village; and • plant and equipment required to be installed on the roof of the aged care facility will be installed as far away from village residences as reasonably possible and will be required to comply with mandatory criteria set out in the decision notification form. 20 Keyton and Arcare have also entered into an access deed to provide Village residents with priority access to the aged care facility ahead of any third party applicant subject to the conditions outlined in that deed. 21 The deed provides for similar priority access for Village residents seeking in-home care.22 The Legislation 21 The SA Act defines a retirement village scheme as a scheme established for, or predominantly for, eligible persons and their spouses or domestic partners under which residences are occupied under a lease or licence.23 Eligible persons are those who are 55 years of age or over and who are retired from full time employment.24 22 The SA Act provides for a Registrar who maintains a register containing various particulars in respect of each retirement village.25 The operator of a village must provide the relevant information to the Registrar and must update those details when there are relevant changes.26 23 If land is, or is to be, used as a retirement village a note of that fact must be endorsed on the relevant certificates of title. It is the operator’s obligation to apply to the Registrar-General of Lands Titles (‘the Registrar-General’) for the relevant 21 Exhibit A1; FDN 2 at SME-12. 22 Ibid. 23 SA Act s 4. 24 Ibid. 25 Ibid s 12. 26 Ibid s 13. -- 7 of 27 -- [2024] SASC 66 McIntyre J 6 endorsement before any residence contract relating to that retirement village is entered into.27 The Registrar-General may cancel an endorsement made under s 56 if satisfied that the land is no longer used, or to be used, as a retirement village.28 24 Where a residence contract provides for an exit entitlement, the rights of a resident to payment of the entitlement are a charge on “the land in the retirement village other than a residence owned by a resident or common property in a community retirement village”.29 This charge ranks ahead of any other mortgage, charge or encumbrance over the land. It can only be enforced with the approval of the Supreme Court. It is subject to any conditions imposed by the Court and is otherwise enforceable in the same way as a mortgage. 25 The operator of a retirement village is permitted to grant a licence to occupy or lease land to eligible persons under s 57 which provides as follows:30 57—Lease of land in retirement village (1) The operator of a retirement village may lease, or grant a licence to occupy, land within the village that is not immediately required for the purposes of the scheme to an eligible person. (2) However, the operator must not, under subsection (1), lease, or grant a licence to occupy, land within the village that has formerly been occupied pursuant to the scheme unless either the former resident consents (in accordance with any requirements prescribed by the regulations) to the lease or licence or the exit entitlement owing to the former resident in relation to the cessation of such occupation has been paid in full and all amounts deducted from the exit entitlement have been paid to the relevant fund, account or person. (3) Unless the Minister authorises a lease or licence for a longer term, the term of any such lease or licence must not exceed 5 years. 26 Operators are required to issue residence contracts in writing. These contracts must, amongst other things, detail the rights and obligations of residents in relation to:31 • occupation of the residence; • recurrent charges; • additional services and facilities available to residents and the costs associated with those, and 27 Ibid s 56. 28 Ibid s 56(5). 29 Ibid s 27(10). 30 Ibid s 57. 31 Ibid s 20. -- 8 of 27 -- [2024] SASC 66 McIntyre J 7 • the right to terminate the right of occupation of the residence and to receive an exit entitlement. 27 There are various disclosure requirements before entering into such contracts.32 28 It is a term of every residence contract that, before any redevelopment of a village is commenced, the operator will convene a meeting of residents. The operator must not proceed without having given due consideration to residents’ rights arising from their contracts and, if relevant, making reasonable arrangements for the provision of alternative accommodation.33 29 The residence contracts are enforced against the current operator of the retirement village even if entered into with another operator.34 Residents have a right of occupation that cannot be terminated, except in identified and limited circumstances.35 An operator such as Keyton cannot unilaterally terminate a scheme. There are two statutory mechanisms which address the termination of a scheme. Termination by the Minister under s 59, and termination authorised by the Supreme Court under s 58. Does the Court have the power to partially terminate a Scheme? 30 The Court undoubtedly has the power to authorise the termination of a retirement village scheme under s 58 of the SA Act. A key issue to be determined in this matter is whether s 58 confers a power to permit a partial termination of a scheme. The section provides as follows:36 58—Termination of retirement village scheme on application to Supreme Court (1) Subject to this Act, a retirement village scheme cannot be terminated without the approval of the Supreme Court while a person who has entered into occupation of a residence under the scheme remains in occupation of that residence. (2) The Minister will be a party to any proceedings in which the Supreme Court's approval of the termination of a retirement village scheme is sought. (3) If the Supreme Court approves the termination of a retirement village scheme it may make such orders as it thinks necessary to protect the interests of existing residents. (4) Without limiting subsection (3), if the Court makes an order under this section that will terminate residence contracts, the Court- (a) must fix in the order a date by which the residents who are affected by the order must vacate their residential premises in the village; and 32 Ibid ss 21, 22. 33 Ibid s 37. 34 Ibid s 24(6). 35 Ibid s 44. 36 Ibid s 58. -- 9 of 27 -- [2024] SASC 66 McIntyre J 8 (b) may order an operator or former operator (other than an administrator appointed under Part 4) to pay compensation to each resident affected by the order for the resident's loss of rights under a residence contract; and (c) may make such other orders as it thinks fit. The submissions 31 Keyton, in its written submissions, sets out a number of propositions concerning the construction of s 58 in support of its contention that the section permits partial termination of the Scheme as follows:37 (a) A retirement village scheme (a legal construct) is self-evidently something different from the retirement village itself (a physical concept). However, any particular scheme is necessarily tied to and referable to particular land. It is therefore not meaningful to refer to a scheme without relating it to the retirement village land to which the scheme relates. (b) Although a scheme may come into existence and be logically anterior to the creation of charges on or over particular land, and the requirements for a memorial (or endorsement) in respect of the land, those charges and that endorsement become constituent elements of the scheme. In other words, once established, the scheme takes on the statutory incidents in respect of the land in the village. The nature and extent of the rights to and in respect of land are part of the legal arrangement that comprises the scheme. (c) The distinctive nature of a particular scheme is to be identified by considering the various arrangements in place and the land in respect of which the statutory incidents apply. So, for example, a scheme involving identical contractual arrangements but pertaining to entirely different land, and where the land the subject of any charge is different, must constitute a different scheme, even if the operator is the same. (d) Accordingly, an operator who desires to alter (by excising land from) a scheme can be said to be partially terminating the scheme. The mere fact that, after the sought- after relief is granted, there will still be a scheme in operation, does not mean there is not a partial termination of the scheme that was previously in place. That is because the scheme that will subsist will be distinct from the scheme that was previously in place. (e) Further, if the legislature has seen fit to grant a power to approve the termination of an entire scheme, it would be surprising if the Court did not have the more modest power to approve a partial termination of the scheme. (There is sometimes said to be a legal maxim, applicable to the grant of powers, that “the greater includes the lesser”). 32 The Minister is generally supportive of the submissions made by Keyton in relation to the construction of s 58. The Minister says that the objects of the SA Act introduce practical content to the abstract concept of a retirement village scheme. The Minister referred to a decision, Brown v Commonwealth Bank of Australia38 (‘Brown’). This relates to the predecessor to the SA Act, the Retirement Villages Act 1987 (SA) (‘the old Act’). Brown did not concern the termination of 37 FDN 53 at [5.20]. 38 (1993) 63 SASR 188. -- 10 of 27 -- [2024] SASC 66 McIntyre J 9 a scheme but was rather a case about the priority of statutory charges under the old Act, as against a mortgage registered under the Real Property Act 1886 (SA). The Minister says however that the general observations of the Court in relation to the concept of a retirement village scheme are nonetheless pertinent. In particular the Minister referred to the comments of Debelle J that the word “scheme” in the context of the old Act denoted a plan or project and that:39 What is necessary is that there is objective evidence of a plan or proposal to establish a retirement village, which provides accommodation of the kind referred to in the definition of “retirement village scheme” and on the terms proposed in the definition. It is not necessary in this case to determine precisely what is required to prove the existence of a scheme. 33 The ultimate finding, upheld on appeal, was that it was the clear intention of Parliament that the statutory charge conferred by the old Act took priority over registered mortgages. This was so even though the proprietor did not first seek the mortgagee’s consent to the endorsement of the title under the terms of the old Act. The Minister says that the decision in Brown and the conceptualisation of the scheme is consistent with the ordinary meaning of scheme which includes a plan or design to be followed. 34 The Minister agrees with Keyton’s ultimate position, that the nature and extent of the rights to, and in respect of, land form part of the legal arrangements that comprise a retirement village scheme. The Minister further says that a scheme could encompass broader concepts than land, such as residents’ interests, although this is not an issue that needs to be resolved for the purpose of these proceedings. The Minister says that it would therefore be artificial to divorce the legal concept of the scheme from the physical concept of the land, which forms part of the village comprising the scheme. An alteration or reduction in the land that forms part of the village would undoubtedly represent a change to the foundational plan or proposal, such that the scheme would no longer subsist in the same form as first established. In that sense, the Minister agrees with Keyton’s fourth submission outlined above.40 35 The Minister says that there is a further indicator in support of Keyton’s proposed construction of s 58 of the SA Act. Specifically, the Minister refers to subsection 58(4) and contends that the use of the word “if” is significant. It suggests that a termination can occur which does not include termination of residence contracts under s 58(3). This is said to support a construction that the section permits a scheme to be terminated in a partial way. 36 Further, the Minister contended that, if there is no power to partially terminate a scheme, the legislation would appear to have no real or obvious mechanism for an operator to excise or change land that comprises a retirement village. When one has regard to the objects of the SA Act, which require the 39 Ibid at [194]. 40 FDN 53 at [5.20(d)]. -- 11 of 27 -- [2024] SASC 66 McIntyre J 10 striking of an appropriate balance between the rights of the operator and the residents, the Minister contends that an ability to partially terminate a retirement village sits very firmly within that statutory pursuit. 37 The Minister noted that this is the first application of its type before the Supreme Court of South Australia. The Minister says that it is important in this context for the Court to consider the relevance, if any, of a decision of the Supreme Court of Western Australia, Retirement Care of Australia (Hollywood) Pty Ltd v Commissioner for Consumer Protection41 (‘Hollywood’) which is the only Australian decision in which the question of partial termination of a retirement scheme been considered. The Hollywood Decision 38 The Hollywood decision concerned an application by a retirement village operator to partially terminate a retirement village scheme under the Retirement Villages Act 1992 (WA) (‘the WA Act’). The operator managed a retirement village in Nedlands, WA. It subdivided the land into two allotments, Lot 888 and Lot 889. Lot 889 formerly comprised independent living units, a dementia hostel, an auditorium, a medical centre, and a community centre. The operator demolished all improvements on Lot 889 leaving it vacant. The demolition was part of a development plan to sell Lot 889 and to construct a new aged care facility, nursing home, community centre and other facilities. 39 To facilitate the sale of Lot 889, the operator applied to the Supreme Court to, in effect, partially terminate the retirement village scheme operating over Lot 889 by seeking:42 • An order granting approval for the termination of the retirement village scheme on Lot 888 and Lot 889 under s 22 of the WA Act; • A declaration that the charges under the memorial over Lot 889 have been satisfied, extinguished or determined and no longer affect that Lot;43 and • A declaration that immediately the order takes effect there is a retirement village scheme being conducted on Lot 888. 40 Some of the residents of the retirement village opposed the application. 41 Section 22 of the WA Act is in similar terms to s 58 of the South Australian Act and provides as follows:44 41 [2013] WASC 219 (‘Hollywood’). 42 Hollywood at [60] – [64]. 43 Section 15 of the WA Act required that where land is used or proposed to be used for the purposes of a retirement village, the owner of the land must lodge a memorial with the Registrar of Titles. The Memorial in Hollywood noted that the land may be subject to a charge securing repayment of money to residents of the village under s 20 of the WA Act. 44 Retirement Villages Act 1992 (WA) s 22. -- 12 of 27 -- [2024] SASC 66 McIntyre J 11 (22) Termination of retirement village scheme (1) A retirement village scheme cannot be terminated without the approval of the Supreme Court while a person who has been admitted to occupation of residential premises under the scheme remains in occupation of those premises. (2) The Commissioner will be a party to any proceedings in which the Supreme Court's approval of the termination of a retirement village scheme is sought. (3) If the Supreme Court approves the termination of a retirement village scheme it may make such orders as it thinks necessary to protect the interests of existing residents. 42 The Court ultimately held that this was not a case to which s 22 of the WA Act applied and refused the relief sought by the operator. Specifically, Pritchard J concluded that the relief sought was not a termination within the meaning of s 22 of the WA Act. Her Honour further concluded that such a termination would, not of its own, force effect or precipitate the cancellation of the charge over Lot 889 and further concluded that the removal of a memorial in respect of Lot 889 would not automatically negate the charge over that land. Justice Pritchard reached these conclusions by a number of steps. 43 First, Pritchard J found that, in construing the power to approve a termination in s 22 of the WA Act, it was important to distinguish between what constitutes a “retirement village” and what constitutes a “retirement village scheme”. It was said that, whereas a retirement village is a complex of residential premises and appurtenant land occupied or intended for occupation under a scheme or used or intended to be used in connection with a scheme, the scheme itself was to be understood as separate and distinct from any land. 44 Second, Pritchard J noted that nothing in the definitions of the legislative scheme of the WA Act required that the land in a retirement village itself formed part of the retirement village scheme. Although the two concepts were closely linked, the expressions were not, in her Honour’s view, used interchangeably in the WA Act. 45 Third, Pritchard J found that the statutory charge and the memorial did not form part of a retirement village scheme. Rather they were practical consequences that arose following the establishment of a scheme. Justice Pritchard considered that the statutory charge would only be extinguished in two circumstances. Either where the resident was repaid the entry premium or where land was sold pursuant to an order under s 21 of the WA Act. Justice Pritchard further considered that the termination of a scheme did not, of itself, have any bearing on the continued registration of the memorial in respect of the land in the village. The only means by which a memorial might be cancelled under the WA Act was by application to the Registrar under s 15(8). 46 Fourth, Pritchard J found that s 22 of the WA Act does not involve an order by the Court terminating the scheme. Rather the Court approves the termination but the termination itself occurs by some other means. Further, the termination of -- 13 of 27 -- [2024] SASC 66 McIntyre J 12 a scheme did not, of itself, have any bearing on the residence contracts and service contracts which may exist between residents and the owner. They continue according to their terms. 47 In light of that interpretation of the statutory regime, Pritchard J concluded the relief sought by the operator did not involve a termination of the scheme, and accordingly, this was not a situation in which s 22 of the WA Act applied. Comparison of the WA Act and the SA Act. 48 Whilst, at first glance, s 22 of the WA Act and s 58 of the SA Act are similar in terms, there are material differences between the WA Act and the SA Act which provide a different context for those provisions. These contextual differences mean that the decision in Hollywood is of limited assistance in determining the nature and extent of the power conferred under s 58 of the SA Act. 49 The WA Act does not contain an objects section. Relevantly, one of the objects of the SA Act is to provide a regulatory framework that achieves a balance between the rights and responsibilities of residents and operators of retirement villages.45 Of particular importance is that the definition of “retirement village” in the SA Act differs from the definition in the WA Act. The two definitions are:46 SA Act Retirement village means a complex of residences or a number of separate complexes of residences (including appurtenant land) occupied or intended for occupation under a retirement village scheme but does not include a complex excluded from the ambit of this definition by the regulations. WA Act Retirement village means a complex of residential premises, whether or not including hostel units, and appurtenant land, occupied or intended for occupation under a retirement village scheme or used or intended to be used for or in connection with a retirement village scheme. 50 The WA Act contemplates that land which is used for or in connection with a retirement scheme qualifies as land in the retirement village scheme whereas, under the SA Act, the only land in the retirement village is the land which is occupied or intended for occupation under the scheme. The concept of occupation in the SA Act is linked to a person’s residence. For example, the definition of “period of occupation” is as follows:47 period of occupation—a resident's period of occupation of a residence in a retirement village is the period— 45 SA Act s 3. 46 Ibid s 4(1); Retirement Villages Act 1992 (WA) s 3(1). 47 Ibid s 4(1). -- 14 of 27 -- [2024] SASC 66 McIntyre J 13 (a) commencing on the day on which the resident enters into occupation of the residence in the retirement village; and (b) concluding on the day on which the resident ceases to reside in the residence in the retirement village; 51 If a scheme is wholly terminated, there would no longer be residences occupied or intended for occupation under a retirement village scheme. As a result, there would be no “land in the retirement village”48 and the charge would cease to extend over that land. On this view, unlike the WA Act, termination of the scheme would affect the existence or extent of the charge. Accordingly, it appears that, if a scheme is partially terminated, the portion of the land which no longer forms part of the scheme would no longer be “land in the retirement village” and the charges would not extend to the portion of the land which no long forms part of the scheme. 52 Another matter of note is that, in contrast with the WA Act, there are several textual indicators that the SA Act contemplates that approval of the termination by the Supreme Court will itself terminate the scheme. For example, s 44(1)(g) of the SA Act says that one of the circumstances in which a resident’s right of occupation can be terminated is where “the Supreme Court terminates the residence contract in proceedings under section 58”.49 Section 17 of the WA Act, which addresses the termination of residence contracts, contains no equivalent provision. 53 The only form of termination contemplated by the WA Act is termination with the approval of the Supreme Court under s 22 of that Act. The SA Act, however, also contemplates termination by the Minister in s 59. The language of s 59 contemplates that termination may have the consequence of altering the operation of statutory charges over land, the subject of the scheme. Moreover, s 59(5) of the SA Act provides that the Registrar-General must, at the request of the Minister, take any action for or in connection with the issue, alteration, correction, or cancellation of certificates of title necessary to give effect to the provisions of the section. Section 59 assumes that, following a termination, notification of a charge will no longer be appropriate or might require modification. This is consistent with the proposition that, subject to any conditions ordered or imposed by the Minister, the termination of the scheme would also entail the termination of charges over retirement village land. 54 Section 59 only operates when all residents wish to terminate the scheme. If s 59 proceeds on the premise that termination does affect the statutory charge, prima facie, the same position applies under s 58. The word “termination” appears in both sections. That word should be given the same meaning and effect, unless it appears that a different meaning is intended.50 48 SA Act s 27(10). 49 Ibid s 44(1)(g). 50 Registrar of Titles (WA) v Franzon 1975 132 CLR 611, at [618]; McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633 at [643]. -- 15 of 27 -- [2024] SASC 66 McIntyre J 14 55 This is not an exhaustive list of differences between the WA Act and the SA Act however it serves to demonstrate that there is a significant difference between the two pieces of legislation. Accordingly, it is my view the Hollywood decision does not govern the proper construction of s 58 of the SA Act. Conclusion 56 I accept the submission that, since the Court undoubtedly has the power to approve the termination of the entire scheme, it would be surprising if the Court did not have the more modest power to partially terminate the scheme. This is particularly the case when regard is had to the objects of the SA Act and the fact that the Court can impose conditions for the protection of residents. 57 I further accept that, on a proper construction of the SA Act, unlike the WA Act, a retirement village scheme is intrinsically bound up with, and defined by, the land to which it relates, and in respect of which a charge subsists for the protection of residents. To put this another way, the retirement village scheme is different to the village itself but is tied to, and referable to, particular land. Once the scheme has been established, it takes on the statutory incidents in respect of the land in the village. Any charge or endorsement over the land becomes part of the legal arrangement that comprises the scheme. 58 The power to approve a termination under s 58 is a power to effect a termination of a scheme with a consequential power to effect termination of residence contracts. The power is discretionary. Subject to the effect of any orders made under s 58(3) or (4), the power to approve termination brings an end to rights in respect of the land, including the statutory charge. An operator who wishes to remove land from a scheme can be said to be partially terminating the scheme. The scheme that remains, after excision of the land, is distinct from the scheme that was previously in place in the sense that the partial termination might, but not always, terminate residence contracts and will remove the statutory charge over the excised land. All other aspects of the scheme will continue to operate as before subject to any conditions to protect the interests of the residents imposed by the Court as part of the approval. 59 I conclude that the Court does have the power to approve the partial termination of the Scheme sought by Keyton under s 58 of the SA Act. The question is then whether it is appropriate in the circumstances of this case to exercise the discretion to do so. The discretion – what are the relevant considerations? 60 There has not been any prior consideration of the factors the Court ought to take into account in considering the exercise of its discretion to approve the termination or partial termination of a retirement village under s 58(1). The SA Act provides a regulatory framework for the operation of retirement villages under which a balance is achieved between the resident’s rights and the rights and responsibilities of operators. Resident’s rights include contractual entitlements; -- 16 of 27 -- [2024] SASC 66 McIntyre J 15 limits upon the terms and conditions of residence contracts; financial matters including the preservation of resident’s exit entitlements; consultation and disclosure requirements; resident’s committees and dispute resolution mechanisms. I consider that these matters inform the factors relevant to the Court’s discretion and that it is necessary that there be some nexus between the factors going to the discretion and residents or “eligible persons” under the SA Act. I further consider that the reference in s 58(3) to the Court’s ability to “make such orders as it thinks necessary to protect the interest of the existing residents” extends to matters necessary to protect residents’ wellbeing, amenity, safety, security including financial security and legal rights. 61 I accept Keyton’s submissions, supported by the Minister, that, among the relevant considerations, are:51 (a) the attitude of residents and the operator; (b) whether there are benefits to residents and, conversely, whether the proposal may result in any detriment to residents (during and or following the construction phase); (c) whether the proposal would impact upon the capital value of independent living units; (d) whether the proposal would involve a breach of any resident contracts; and (g) whether the remaining land in respect of which the statutory charges would apply has a value that will exceed the aggregate exit entitlements. 62 This list is not exhaustive as the relevant factors may vary according to the circumstances of each application. In this matter Keyton also suggested that a relevant factor to be considered was the position that will result if the proposal does not proceed pointing to broader considerations relating to the public or community interest in the locality.52 The Minister did not support that proposition contending, correctly in my view, that the relevant considerations must be directed or referable in some way to eligible persons within the meaning of the SA Act. There is no obvious textual or contextual basis in ss 58 or 59 to read in public or community interests in the locality as a relevant consideration. 63 Keyton relies upon the lack of aged care beds in the locality of the Village as providing a public interest basis for the exercise of the discretion.53 Whilst there is undoubted public interest in the provision of aged care beds, I do not consider that the public interest aspect of this consideration is relevant to the balancing of the respective rights and obligations of the operator and residents. The lack of aged 51 FDN 53 at [6.4]. 52 Ibid. 53 Exhibit A6 at [20]-[22]. -- 17 of 27 -- [2024] SASC 66 McIntyre J 16 care beds in the locality is however undoubtedly of relevance to a consideration of the benefits of the proposal to the residents given that the affidavit of Mr Emmitt indicates that most residents who leave the Village do so to take up accommodation in aged care.54 Is it appropriate to permit partial termination of the Scheme in this matter? 64 Keyton has submitted detailed and comprehensive materials in the affidavit material and other documents tendered in Court in support of its application to excise proposed allotment 101. The application is well considered and well documented. Insofar as it is possible, there is certainty as to the proposed development of the allotment including contractual arrangements with the proposed developer, Arcare, and approved development plans for the site. The residents have been advised of the proposal and kept informed throughout. They have had input into the proposed development. Attitude of residents and operator 65 Keyton operates 76 retirement villages across Australia, with a total of 13,139 units and approximately 16,580 residents as of 26 March 2024.55 Mr Emmitt is a senior employee of Keyton and has sworn four affidavits in support of this application. In his first affidavit56 Mr Emmitt outlined Keyton’s strategy for managing its retirement villages, in particular he says:57 Keyton has adopted a Continuum of Care strategy. The strategy is focused on introducing co-located aged care facilities to retirement villages or developing aged care facilities adjacent to existing retirement villages. The strategy may be achieved by finding vacant land on site, acquiring adjoining properties, and partnering with aged care operators to deliver aged care facilities. As a retirement operator that oversees 75 villages and approximately 16,500 residents nationally, one of the biggest challenges Keyton sees with an aging population is depression and social isolation. A couple will move into a village and with time, almost invariably one resident's health will deteriorate faster than the other. This will necessitate the ailing resident moving into a higher level of care (i.e. aged care). In my experience in my role at Keyton and in my position on the Property Council Retirement Living Committee where issues in the retirement living industry are addressed on a regular basis, I understand the move to aged care can be a very stressful time for residents, particularly those who have been married for many years. The remaining resident, depending on his or her health, will eventually stop driving. Unless there is a co-located aged care facility (i.e. within walking distance), the resident is not only separated from his or her partner, but also the community within the village. This can lead to a sense of isolation and depression for both residents. 66 These are valid concerns. Mr Emmitt further indicated that, as at 22 September 2023, Keyton had nine existing retirement villages with co located aged care facilities operated by third party operators and had 11 retirement villages (including Townsend Park) where Keyton proposes to construct aged care facilities 54 Exhibit A1; FDN 2 at [12]. 55 Exhibit A5 at [6]. 56 Exhibit A1; FDN 2. 57 Ibid at [10]-[11]. -- 18 of 27 -- [2024] SASC 66 McIntyre J 17 on the village site. Keyton views co-location of aged care facilities as making the village more desirable and marketable to residents and potential residents. Plainly, Keyton is supportive of the proposal and has undertaken considerable steps to bring it about. No doubt this has necessitated the investment of considerable time and resources. 67 No resident wishes to take an active part in these proceedings, although three have filed affidavits in support of Keyton’s application.58 The affidavit of Sophia Biermann59 sets out the steps that she took to assist the Minister in his determination of the s 59 application brought by Keyton. Keyton supplied her with a list of 185 names said to be the name of every resident who resides at Townsend Park as at 6 March 2023. The initial part of the Office’s consultation process involved the distribution of resident response forms by the Office to residents. Three information group sessions were held by the Office on 9 and 10 March 2023. The resident response form enabled residents to indicate their objections, support or to request a meeting with the Office to ask further questions. By 24 March 2023, the Office had received 125 residents’ response forms and additional correspondence from some residents.60 A later part of the Office’s consultation process involved meetings with certain residents. These were conducted over by Ms Biermann six days between 27 March 2023 and 5 April 2023. The information collected during this consultation process indicated that 176 residents supported the application, and nine residents (residing within eight residences) did not. The nine residents who did not support the application were members of the cohort interviewed by Ms Biermann. The objections were in broad terms described by Ms Biermann in her affidavit as follows:61 1. Concern about loss of green space, access to the land for walking dogs and ease of egress. 2. Opposition to any further development in the village. 3. Concern about noise, dust and other impacts of construction. 4. Concern about noise and disturbance after the development is complete. 5. Dislike of the idea of living near a residential aged care facility. 68 Ms Biermann indicated that since the conclusion of the Office’s consultation process in April 2023, the Office had not received any correspondence from any resident of Townsend Park indicating additional views on the determination of the oval as part of the village. In addition, she deposes that, as at 24 October 2023, three of the non-supportive residents had withdrawn their objection. 58 Exhibit A1; FDN5; FDN 6; FDN 7. 59 Exhibit A1; FDN 23. 60 Ibid at [9]-[11]. 61 Exhibit A1; FDN23 at [16]. -- 19 of 27 -- [2024] SASC 66 McIntyre J 18 69 Mr Emmitt provided a further affidavit sworn on 26 March 2024 to update various matters.62 There is a discrepancy in the numbers of objectors identified in Mr Emmitt’s affidavit compared to Ms Bierman’s affidavit. Ms Bierman’s affidavit suggests that as at 24 October 2023 there were only six objecting residents whereas Mr Emmitt indicates that, on 7 December 2023, he caused a letter to be sent to nine opposing residents. Mr Emmitt invited those residents to attend a meeting with Keyton and a representative from the Office on a confidential basis.63 He received two written responses to his letter, the details of which he outlined in his affidavit. In summary, one resident indicated did not feel able to attend a meeting, and two withdrew their opposition to the proposal.64 Three of opposing residents were willing to participate in a meeting. 70 Three meetings took place between Mr Emmitt, another employee of Keyton and Ms Biermann on 20 December 2023. The meetings were conducted on a confidential and without prejudice basis.65 The outcome of the three meetings was that one resident withdrew their objection and two residents continued to oppose the proposed development.66 Accordingly, Mr Emmitt says that, as at 21 March 2024, there were 171 residents in the village; six object to or oppose the aged care development.67 Mr Emmitt deposed to his understanding of the position of the six opposing residents,68 as follows: • Resident A doesn’t have any particular concerns about the aged care facility but still opposes the development;69 • Resident B doesn’t believe that aged care is needed in the area, is concerned about the dust that may be caused from the construction works and considers that they were told there would be no development of the oval;70 • Resident C doesn’t want to live in close proximity to an aged care facility;71 • Resident D has concerns about the noise that may be caused by the construction, and the loss of space as a result of the new facility;72 62 Exhibit A5. 63 Ibid at [40]. 64 Ibid at [44]-[45]. 65 Ibid at [48]. 66 Ibid. 67 Ibid at [10]. 68 Ibid at [51]. 69 Exhibit A1; FDN 10 at [8(h)]. 70 Ibid at [8(l)]. 71 Ibid at [8(q)]. 72 Ibid at [8(v)]. -- 20 of 27 -- [2024] SASC 66 McIntyre J 19 • Resident E73 has concerns about the loss of amenity that could be caused by a co-located aged care facility, and also opposes the development as they do not like change; and74 • Resident F is concerned about the noise and dust that could be caused by the construction, the loss of open space as a result of the new facility, and the impact that the development may have on other residents.75 71 Mr Emmitt’s affidavit indicates the steps that Keyton has taken to address concerns held by the residents.76 Whilst these have not been accepted by the objecting residents, I accept that Keyton has demonstrated a commitment to working with all residents to address or minimise their concerns and that they have taken steps to treat the health and wellbeing of residents as a matter of importance. I note further that Keyton relocated two non-objecting residents within the village due to health concerns arising from construction of the development. Prospective purchasers of the vacated residence were informed of the proposed aged care development. Notwithstanding this, Mr Emmitt says that Keyton received five offers at a significant increase on the original purchase price.77 72 Whilst the concerns raised by the six objecting residents are valid concerns, I accept that Keyton and Arcare are taking steps to address those concerns. Further the objections are from a relatively small cohort of residents, the overwhelming preponderance of Village residents (including the three who have filed affidavits in support of this application)78 support the proposal. The fact that the development is supported by the majority of residents is a factor which weighs in favour of partially terminating the scheme. Benefits and detriments to residents 73 Village residents will lose the ability to use the oval (proposed allotment 101). The loss of this green space is undoubtedly a detriment to all residents. Specific residences and their occupants will be adversely impacted during the construction process and thereafter by the operations of the proposes aged care facility. 74 Villas 14 to 25 (Stage 1) and villas 115 to 127 (Stage 5) are adjacent to the oval and will be closest to the aged care development. The Stage 5 villas are located on the southern side of the oval. The backyards of villas 115 to 127 are oriented towards the oval, but due to solid fences do not have a view of the oval. All purchasers of the Stage 5 villas were made aware of Keyton’s intention to 73 An email was received by my Chambers following the conclusion of trial informing that Resident E has passed away. 74 Exhibit A1; FDN 10 at [8(cc)]. 75 Ibid at [8(gg)]. 76 Exhibit A5 at [51]. 77 Ibid at [53]-[60]. 78 Exhibit A1; FDN5; FDN 6; FDN 7. -- 21 of 27 -- [2024] SASC 66 McIntyre J 20 construct an aged care facility on the oval directly behind the rear fence.79 None of the residents presently residing in Stage 5 villas have objected to the partial termination of the Scheme and construction of the aged care development.80 75 The Stage 1 villas are located on the northern side of the oval. The backyards of villas 14 to 25 are oriented towards the oval and some have a rear gate with access to the oval and surrounding pathways. If the aged care development is constructed their outlook will be adversely affected but a pathway will be retained as part of the development. Four residents (Residents A, B, C and D) from Stage 1 have objected to the aged care development.81 76 The Stage 2 and 4 villas do not have any view of the oval. There are no objections from residents in Stage 4. One resident (Resident E) from Stage 2 has objected.82 The Stage 3 villas and apartments are some distance from the oval. Some apartments will have a view of the proposed development. Only one opposing resident (Resident F) lives in an apartment.83 77 It is clear that there will be some loss of amenity particularly for residents in Stage 1. As against these detriments must be balanced to the benefits to residents. The deed between Arcare and Keyton assures residents of priority access to both the in-home care and residential care. The potential benefits are that Arcare will be able to offer homecare services to residents of the Village to assist them to remain living independently. If a person living in the Village requires an aged care bed and they are able to secure a place within the Arcare facility, their friends and partners will only be a short walk away. Given the evidence about a lack of age care beds in the locality and the fact that most residents leave the village in order to move to residential aged care facilities84, priority access to the proposed development is an important benefit for residents. 78 Notwithstanding the loss of the oval, there will still be a significant amount of open green landscaped areas and open space for use of residents in the Village. Ms Noral Wild, a registered valuer specialising in valuing retirement village assets, provided an expert report in this matter. She gave her opinion that, if allotment 101 is excised, the remaining open space would be representative of the open space typically offered by other retirement villages.85 Further, the approved development plan requires landscaping in the areas surrounding the aged care development so that there would be greenery immediately adjacent to the development. 79 Exhibit A1; FDN 12 at [46]. 80 FDN 53 at [6.22]. 81 Exhibit A1; FDN 21 at MDC-4. 82 FDN 53 at [6.24]. 83 Ibid at [6.25]. 84 Exhibit A1; FDN 2 at [12]. 85 Exhibit A1 at 2279 at [6.25]. -- 22 of 27 -- [2024] SASC 66 McIntyre J 21 79 The gazebo and barbeque area presently situated on allotment 101 will be demolished, however, Keyton has committed to building a new gazebo and barbeque area in the community area located in allotment 102.86 80 Overall, it appears from the level of support that the majority of residents value an aged care facility above a vacant oval. In my view, the benefits of the proposal outweigh the detriments and overall weigh in favour of partially terminating the scheme. Impact on capital value of ILU/ILA 81 To properly consider this issue and the other factors relating to the financial impacts of a partial termination it is important to consider the various bases upon which residents occupy their ILU or ILA. All existing residents occupy their ILUs or ILAs under a license agreement with Townsend House Inc or a lease agreement with Keyton depending on the date when they joined the village. 82 Under the Townsend House Inc contracts, the operator grants residents a licence to occupy their ILU or ILA for the lifetime of the resident (subject to earlier termination) under a standard deferred management fee (‘DMF’) contract.87 Residents benefit from any capital gain in their ILU or ILA on exiting the Village. 83 Under the Keyton contracts, the operator grants residents the exclusive right to use, occupy and enjoy their ILU or ILA under a lease agreement. Incoming residents may select one of five contractual lease models.88 These are: • Deferred Management Fee (‘DMF’) • Pre-Paid Plan • Refundable Contribution • Pay as You Go • Pay as You Go Plus 84 These models involve different payments on entry and exit from the village. The majority of residents occupy their ILU or ILA subject to a DMF lease contract, under which residents benefit from any capital gain in the residence or on exiting the village. The only other model where a resident may benefit from any capital gain is the Prepaid Plan model. Under the other three models, residents do not benefit from any capital gain in their residence on exit. 85 Under the DMF model, Prepaid Plan model and Refundable Contribution lease models, residents have the right to use, occupy and enjoy their ILU or ILA 86 Exhibit A1; FDN 2 at [56]-[57], SME-15. 87 Exhibit A1; FDN 2 at [38], SME-7. 88 Exhibit A1; FDN 2 at [36]-[37]. -- 23 of 27 -- [2024] SASC 66 McIntyre J 22 for a term of 99 years, unless terminated earlier. This is in contrast to the Pay As You Go or Pay As You Go Plus lease models, which each have terms of five years unless, terminated earlier.89 86 Ms Wild in her report gave her opinion that, having regard to the advantages and disadvantages, co-located aged care within a retirement village does not negatively impact the valuation of a retirement village or the individual residences within a village. She further opined that, in time and as more data becomes available, the market will recognise the benefits of co-located aged care in retirement villages and residences in retirement villages will sell more quickly or potentially benefit from price premium compared with retirement villages without co-located aged care.90 Ms Wild’s opinion is supported by the recent sale of an ILU formerly occupied by the residents who relocated within the Village (as discussed in [71]).91 87 I find that the impact of partial termination on the capital value of the ILUs and ILAs may be positive but is at worst neutral. Is there sufficient value remaining to cover aggregate exit entitlements? 88 Mr Emmitt’s affidavit of 24 March 2024 indicates that, as at 21 March 2024, the value of the residents’ exit entitlements under the different contractual models is approximately $71,922,224.92 Keyton says that, based on the data maintained by Keyton across its portfolio for the last six financial years, it is highly unlikely that the full amount of the exit entitlements would be required to be paid out at the same time. In the particular case of the Village, it said that:93 (a) On average about 6 residents leave the Village each year; (b) The average resident exit entitlement is $566,372 per ILA or ILU; and (c) The average exit entitlement in the Village is about $3,305,807.38 per year. 89 Keyton has had the financial means to satisfy the exit entitlements of residents exiting the Village since it acquired the Village. Further, Keyton has obtained an independent valuation from CBRE dated 19 December 2022.94 The independent valuation shows that the entire Village site “as is”, and assuming vacant possession was valued at $97,545,000 in December 2022; and that Allotment 101 was then valued at $8,500,000. The valuation demonstrates that if Allotment 101 is excised from the Village and sold to Arcare there will be sufficient security available over the balance of the site to satisfy the exit entitlements of all residents. 89 Ibid at [32]. 90 Exhibit A1 at 2256 at [4.3.10]. 91 Exhibit A5 at [53]-[60]. 92 Ibid at [35]. 93 Exhibit A1; FDN 2 at [121]. 94 Ibid at [114]-[120]. -- 24 of 27 -- [2024] SASC 66 McIntyre J 23 Would the proposal involve a breach of a residence contract? 90 The SA Act contemplates that the termination of a Retirement Village Scheme might terminate a resident’s contract.95 It follows therefore that this would also be the case in circumstances of a partial termination. It is therefore appropriate to consider whether Keyton’s proposal would involve a breach of any resident’s contract. 91 There are a large number of contracts applicable to the Village. As outlined above, there are the Townsend House Inc contracts96 and Keyton contracts.97 The Townsend House Inc contracts are standard DMF contracts. The Keyton contracts are more varied and provide for different payment models. It is, however, clear that while the payment structures differ between the Keyton contracts, the terms relevant for present purposes are the same. In particular, the Keyton contracts define the “village land” to include the four parcels of land that comprise the village and relevantly provide that: • Residents may use the “Community Areas and Facilities” in common with other residents subject to complying with conditions of use.98 “Community Areas and Facilities” are defined as the “buildings, facilities, lawns, gardens, roads, pathways and other parts of the Village” that Keyton makes available for common use by residents at the Village from time to time, including the community centre and recreational facilities (if any). • For the term of the lease, Keyton grants to the resident a licence to enjoy the “Townsend House Areas” in common with all other licensees subject to the “Townsend House Licence Conditions”.99 • The “Townsend House Areas” are defined as “those open spaces of Allotment 65… together with any other area so designated by [Keyton] and any areas within the buildings on Allotment 65 (with rights of access thereto) as are designated for use of by [sic] Residents from time to time”. Allotment 101 is contained in Allotment 65 and comprises open space. Accordingly, it falls within the definition of “Townsend House Areas” under the Keyton contracts.100 • The “Townsend House Conditions” are included at Schedule 10 of the Keyton contracts. Keyton may amend, modify or replace these conditions by written notice to the residents. 95 SA Act s 4(1)(g). 96 Exhibit A1; FDN 2 at SME-7. 97 Ibid at SME-6. 98 Ibid at SME-6 at [10.3]. 99 Ibid at SME-6 at [10.4]. 100 FDN 53 at [6.33]. -- 25 of 27 -- [2024] SASC 66 McIntyre J 24 • Keyton may carry out future development work in the Village that it considers “suitable” in the form and at the time Keyton decides “in its absolute discretion” subject to any requirements of the SA Act.101 Details about current or proposed development work are set out in Schedule 11. • Keyton must use its best endeavours to minimise any disturbance or disruption to the resident’s use and enjoyment of their residence and the “Community Areas and Facilities”. Residents are obliged not to make any objections, submission, appeal or claim, or bring any proceeding, in relation to any of Keyton’s decisions about the development of the Village or in respect of anything Keyton does in carrying out the development works.102 • Keyton may from time to time: 103 (i) alter or extend the “Community Areas and Facilities”; (ii) close all or part of the “Community Areas and Facilities” for refurbishment, repair or maintenance purposes; and (iii) expand or redevelop other parts of the Village. 92 The Townsend House Inc contracts relevantly grant each resident a licence to enjoy the “Common Areas” and “Townsend House Areas subject to the Townsend House Licence Conditions” for the lifetime of the resident (subject to earlier termination).104 “Common areas” are defined in the Townsend House Inc contracts as “those areas of the Village designated by [the operator] from time to time for common use including the Communal Facilities”. “Townsend House Areas” are defined as “those open spaces of Allotment 62 in the Location Plan together with any other area so designated by [the operator] and any areas within the buildings on Allotment 62 (with rights of access thereto) as are designated for use of Village Residents”.105 The Townsend House Licence conditions are not relevantly different to the Licence Conditions in Schedule 10 of the Keyton contracts and, as with the Keyton contracts, can be amended, modified, or replaced by the operator. 93 Accordingly, the Keyton contracts grant the operator a degree of discretion as to the extent of “Community Areas and Facilities” offered from time to time and the Townsend House Inc contracts grant the operator discretion as to the extent of the “Common Areas”. 101 Exhibit A1; FDN 2 at SME-12 at [15.7]. 102 Ibid at SME-12 at [15.7]. 103 Ibid at SME-12 at [15.8]. 104 FDN 53 at [6.36]. 105 Ibid at [6.37]. -- 26 of 27 -- [2024] SASC 66 McIntyre J 25 94 Both the Keyton contracts and the Townsend House Inc contacts, provide residents with a licence to enjoy the “Townsend House Areas” (including proposed allotment 101) in common with all other licensees subject to the “Townsend House Licence Conditions”. The definition of “Townsend House Areas” in the Keyton contracts and the Townsend House Inc contracts are not relevantly different. Whilst it could be said that the wording of the definition is somewhat ambiguous, I do not take the definition to mean that the operator has reserved a discretion in relation to areas within buildings but not areas within the open spaces. Rather, I consider that the “Townsend House Licence Conditions” confer a significant degree of discretion on the operator to amend, modify or replace the conditions relating to areas within the buildings and areas within the open spaces. The concluding words of the definition which read “as are designated for use of by Residents from time to time”, qualify the expression “open spaces”. The power to designate areas “from time to time” entitles the operator to decide that, at any point, a particular part of the open space will not be so designated. 95 Accordingly, I do not consider that a proposal to subdivide and sell a portion of the otherwise open space within Allotment 65 amounts to a breach of the residence agreements. Conclusion 96 In all of the circumstances, it is my view that the application ought to be granted. The overwhelming majority of residents are in favour of the application, the detriment to residents is significantly outweighed by the benefits and the application will not adversely affect the financial viability of the Scheme nor the contractual entitlements of the residents. Granting the application in this case represents an appropriate balance between the rights and responsibilities of both residents and the operator of the retirement village, Keyton. 97 I will hear the parties as to the terms of the order and any conditions that may be appropriate. -- 27 of 27 --