Carson v Illawarra Retirement Trust t/as IRT Group (No 2) [2025] QCAT 187

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Carson v Illawarra Retirement Trust t/as IRT Group (No 2) [2025] QCAT 187 PARTIES: GEOFFREY RAYMOND CARSON (applicant) v ILLAWARRA RETIREMENT TRUST T/AS IRT GROUP (respondent) APPLICATION NO/S: OCL015-22 MATTER TYPE: Other civil dispute matters DELIVERED ON: 12 May 2025 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Member Paratz AM ORDERS: The Illawarra Retirement Trust t/as IRT Group is to implement processes that fairly apportion the insurance costs properly attributable to IRT Parklands Village in determining the General Services Charge for the IRT Parklands Village. The Illawarra Retirement Trust t/as IRT Group is to establish a methodology for disclosing the bases upon which the insurance costs properly attributable to the IRT Parklands Village have been apportioned. The process of disclosing the bases upon which the insurance costs properly attributable to the IRT Parklands Village is made is to include the Illawarra Retirement Trust t/as IRT Group providing to the residents of IRT Parklands with a document in substantially the same form as the ‘Insurance Explainer’ (which is Annexure A to the submissions filed by the Illawarra Retirement Trust t/as IRT group) which is to be enclosed with the General Services Charge budget each year (amended as necessary) for the year ended 30 June 2026 and thereafter. These Orders apply to General Services Charge budgets from the 2026 financial year onwards. -- 1 of 10 -- 2 Until further or other Order, publication is prohibited of: (a) The materials contained in pages 157-733 attached to the affidavit of Louise Lever dated 29 August 2022; and (b) The materials referred to in Order 2 given on 13 May 2022, and publication of an Excel spreadsheet attached to the statement of evidence of Jason Gaudiosi in hardcopy or in any electronic form or held on a USB. CATCHWORDS: RETIREMENT VILLAGES – GENERAL SERVICES CHARGE – where the operator purchased insurance in bulk – whether the operator is authorised under the Retirement Villages Act 1999 (Qld) to purchase insurance in bulk – whether the correct cost of insurance was included in the General Services Charge for the Village – Final Orders Retirement Villages Act 1999 (Qld) APPEARANCES & REPRESENTATION: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) REASONS FOR DECISION [1] I issued Reasons on 8 August 2024 setting out my findings in this matter and gave Directions for the parties to make submissions as to the Final Orders to be made, and directed that I would determine Final Orders on the papers after the submissions were made. [2] Illawarra Retirement Trust filed submissions as to final orders on 10 October 2024. Mr Carson filed submissions in response as to Final Orders on 7 November 2024. The Illawarra Retirement Trust filed submissions in reply as to final orders on 5 December 2024. [3] These are my Reasons for the Final Orders which I make consequent upon my Reasons issued on 8 August 2024. The parties and orders sought [4] For convenience, I will restate paragraphs [1] to [4] of my Reasons issued on 8 August 2024 as to the parties and the orders sought in this matter. [5] Mr Carson (‘the Resident’) and his wife are residents of a Retirement Village known as ‘Parklands’ at Currimundi in Queensland (‘the Village’). The Resident is Treasurer of the Village’s Residents Committee. [6] The Village is owned and run by the Illawarra Retirement Trust (‘the Trust’). It is for independent living only, and is not an aged care facility. -- 2 of 10 -- 3 [7] The Trust described itself in its Response as follows:1 (1) The Respondent, the Illawarra Retirement Trust (IRT) was founded in 1969. It is a large, not-for-profit, community-based organisation. In accordance with those objectives, it attracts and trains a significant volunteer workforce. IRT is large and sophisticated enough to have internal divisions and subsidiary companies. (2) IRT at the time of the preparation of the budget for the financial year ended 30 June 2020 operated: a) 8 home care services; and b) 21 aged care centres; and c) 34 retirement Villages as well as a Corporate Services Unit (Admin), the IRT Academy and IRT Catering. (3) IRT operates 4 Retirement Villages in Queensland, including IRT Parklands Village situated at 242 Parkland Boulevard, Currimundi (the Village). [8] The Resident filed an Application in the Tribunal on 8 March 2022 for a hearing of matters under the Retirement Villages Act 1999 (‘the Act’). The Resident sought the following orders: (a) That the General Services Charge (‘GSC’) budget adopted by the Respondent under s 102A for the financial year ending 30 June 2022 be amended so that the insurance line item does not include: (i) insurance costs attributable to the aged care and home care operations of the Respondent or its related entities (‘the External Insurance Costs’); or (ii) the costs of insurance cover beyond that to independently verify under s 110 of the Act (‘the Optional Insurance Costs’). (b) That the General Services Charge payable by the residents for FY22 be reduced in accordance with Order (1), and that any overpayment by residents for the period prior to the reduction be refunded to them before 31 December 2022. (c) That the General Services Charge budget adopted by the Respondent for the previous five financial years be reviewed to assess whether the insurance line items included any of the External Insurance Costs or the Optional Insurance Costs and, to the extent that they did, the amount paid by residents towards those costs be refunded to the residents before 31 December 2022. (d) That the Respondent ensure all future general services charge budgets do not include any of the External Insurance Costs, and only include the Optional Insurance Costs if they have been approved by residents in accordance with s 108(1). 1 Response of the Respondent filed 12 May 2022, [1]-[3]. -- 3 of 10 -- 4 (e) That the Respondent provide the Residents Committee with sufficient information as required to independently verify the Respondent’s compliance with orders (1) – (4). (f) Further or other orders that the Tribunal considers appropriate to resolve the dispute. [9] It was Directed by Consent on 30 August 2022 that the relief sought at (c) above (as to the previous five financial years) be deleted. My findings [10] My findings are expressed in paragraphs [99], [108], [110], [111], [116] and [117] of my Reasons issued on 8 August 2024 as follows: Bulk Insurance [99] I am satisfied that the Trust is acting in pursuit of that obligation by buying insurance in bulk, across its various properties, as a general concept, if by doing so it achieves the most cost-effective alternative for the residents. Categories of insurance cover applicable to the Village [108] There is clear common ground between Mr Evans and Mr Jones that two categories of cover would be obvious and necessary insurance categories directly related to the Village: (a) Industrial Special Risks; and (b) Public Liability. [110] It would appear that some of the other categories that Mr Jones identified are very likely to properly be directly related to the Village: (a) Electrical and Mechanical Breakdown and Consequential Loss Cover (aka Equipment Breakdown); (b) Workers Compensation; (c) Construction Insurance; and (d) Personal accident. [111] I consider it likely that the other categories which Mr Jones identified are more likely to not be directly related to the Village, and should be categorised as directly related to Corporate costs of the Trust: (a) Directors and Officers Liability or Management Liability; (b) Cyber Cover; (c) Corporate Travel; and (d) Journey Injury. Process of Apportioning Cost [116] I am not satisfied that the current process used by the Trust does result in an appropriate allocation to the Village of costs of insurance that should be correctly applied to it, as I consider that some of the costs of insurance -- 4 of 10 -- 5 which are currently being applied to the Village should properly be treated as Corporate costs of the Trust and be borne by the Trust itself. Those costs should be excluded in calculation of the insurance costs to be attributed to the General Services Charge for the Village. [117] The process outlined by Mr Gaudiosi does generally appear to be based upon a logical apportionment, and it may be that a similar process could be utilised in relation to the specific village insurance attribution, if the correct cover and a greater degree of transparency was employed which would allow the residents to see and understand the basis of the amounts for insurance which are included in the General Services Charge for the Village. Final Orders sought by the Trust [11] The Trust submits that the following orders should be made:2 7.1 IRT submits that the following orders be made: (a) IRT is to provide to the residents of IRT Parklands with a document in substantially the same form as the Insurance Explainer which is to be enclosed with the GSC budget each year (amended as necessary) (b) The cost of the following categories of insurance cover properly form part of the GSC charged to residents: i. industrial special risk; ii. Public liability and Professional indemnity; iii. equipment breakdown; iv. personal accident & illness; v. directors & officers; vi. cyber-crime; vii. journey insurance; viii. motor vehicle insurance; ix. voluntary workers; x. corporate travel xi. excess liability; xii. umbrella liability; and xiii. statutory liability (c) the proceedings be otherwise dismissed. 7.2 As the GSC budget for the current period (year ended 30 June 2025) has already been implemented, IRT submits that the requirement to provide 2 Respondent's submissions as to final orders, filed 10 October 2024, [7.1]. -- 5 of 10 -- 6 the Insurance Explainer should apply for the GSC budget for the following period onwards, being the year ended 30 June 2026. Final orders sought by the Resident [12] The Resident submits that the following orders should be made: 9.1 The applicant submits that the following orders, consistent with the Tribunal’s findings, be made: (a) That the Respondent is to remove any insurance costs which are directly related to the corporate costs of the Trust in formulating the insurance component of the General Services Charge for the IRT Parklands Village. (b) That the Respondent is to implement processes that fairly apportion the insurance costs properly attributable to IRT Parklands Village in determining the General Services Charge for the village. (c) That the Respondent is to establish a methodology for disclosing the bases on which the insurance costs properly attributable to the IRT Parklands Village have been apportioned. (d) These Orders apply to General Services Charge Budgets from the 2026 financial year onwards. 9.2 Noted that the Applicant’s draft orders (b) and (c) may need to be reviewed in the light of the recently passed Retirement Villages (Financial Documents) Amendment Regulation 2024 that imposes new requirements in regard to ‘shared expense’, defined as ‘a line item of expected expenditure for a retirement village… incurred partly for that scheme and partly for another scheme, entity or purpose.’ Where a line item of expenditure of the fund is a shared expense, the disclosure note must state: (i) the other entities, types of entities or purposes for which the expense is expected to be incurred. (ii) the method used to calculate the portion of the shared expense to be paid from the fund. Submissions of the Trust as to Final Orders [13] The Trust, in its submissions as to Final Orders, made the following overall submissions:3 (a) On a proper construction of the Act and the residence contract (‘Contract’), IRT is entitled to include insurance costs that are directly and indirectly related to the Village as part of the General Services Charge (‘GSC’); (b) Having regard to the statutory and contractual framework as well as all the evidence in these proceedings, the cost of all of the categories of insurance cover identified by IRT properly forms part of the GSC; 3 Respondent's submissions as to final orders, filed 10 October 2024, [1.4]. -- 6 of 10 -- 7 (c) IRT has implemented a logical process that fairly apportions the insurance costs to the Village for the purposes of the GSC; and (d) IRT provides its proposed explanatory material at Annexure A to disclose to residents the basis of the insurance costs that are being attributed to the Village in its GSC, whilst still maintaining the commercial confidence of IRT as to its overall activities. [14] The Trust submitted that a test of whether a cover is ‘directly related’ to the Village in assessing whether its cost may be passed on to residents is too narrow, and is not found in either the Contract or the Act.4 [15] The Trust submitted that a proper construction of the Contract was as follows:5 (a) IRT must purchase certain insurance covers (industrial special risks, public liability and workers compensation); (b) IRT may purchase other insurance against risks as may be deemed by the Scheme Operator to be necessary with a reputable insurer; (c) IRT is entitled to recover these costs from the resident in accordance with clause 5 of the contract; (d) Clause 5 permits IRT to include costs as a component of the GSC if they are: (i) ‘operating expenses’ of the Scheme Operator or a Related Entity in respect of the running, maintenance and management of the Village; and (ii) attributable directly or indirectly to the unit and expenses which are levied on a per unit basis and on the village as a whole and such other matters as the Scheme Operator considers relevant having regard to standard business and accounting practices; and (iii) such costs may include costs related to the running, maintenance and management of the Village, all costs associated with provision and maintenance of transport and security for the benefit of the Village residents and any other expenditure properly incurred by IRT in managing, operating or administering the Village or providing general services to residents. [16] The Trust referred to its corporate structure and regulatory framework and submitted that a Retirement Village operator requires competent, fit and proper individuals to manage its operations at all levels, which includes any Board, and that having prudential insurance cover is essential.6 [17] The Trust canvassed the specific types of insurance cover, and submitted that proportions of those properly formed part of the General Services Charge. [18] The Trust submitted that it was content to provide an explanatory document with its yearly budget (Insurance Explainer), which, to the extent possible given the confidentiality obligations and commercial sensitivity, is sufficiently detailed as to 4 Ibid [2.2]. 5 Ibid [3.8]. 6 Ibid [4.1], [4.8]. -- 7 of 10 -- 8 both the types of insurance covers that form part of the GSC, and how the costs are allocated to the Village/residents.7 Submissions of the Resident as to Final Orders [19] The Resident submitted that its position as to ‘bulk purchase’ of insurance was as stated in his original affidavit that ’I am happy for the Respondent to use its bulk- buying power to purchase one insurance policy that covers all of its villages’.8 [20] The Resident also noted, as to the purchase of bulk insurance, that in his original affidavit he had commented “I confirm once again that I am not requiring or expecting the Respondent to have village specific insurance policies. I just require the Respondent to ensure that the residents of our village are only required the insurance costs that transparently represent our fair share of the Respondent’s overall costs for its village operations’.9 [21] The Resident noted that:10 (a) the identification, separation and removal of insurance costs directly related to the corporate costs of the Trust reflects the objectives of the primary order sought in the initial Application, and that (b) the requirement to implement a logical process that fairly apportions the insurance costs directly related to the Parklands Village has arisen as a secondary objective consequent upon the disclosure of insurance type cover that were unknown to the Applicant when the Application was lodged, and that (c) the requirement to establish a means of disclosing to the residents the basis of the insurance costs that are being attributed to the Parklands Village is a supplementary consistent objective. [22] The Resident submitted that the Trust had avoided emphasis on the phrase ‘expense incurred for the sole benefit and operation of the village’ in the residence contract.11 [23] The Resident commented that the proposed ‘Insurance Explainer’ that would accompany the GSC budget had some limitations, but did have value, as follows:12 6.2 This would appear to simply list the amount of each policy that will be allocated to IRT Parklands but does nothing to explain how, or on what basis, each amount would be determined. However, even that, i.e. the breakdown of the budget line item ‘Insurance’, would be an improvement. [24] The Resident confirmed his willingness to comply with the non-publication order continuing indefinitely.13 7 Ibid [6.1]. 8 Applicant’s submissions in response to IRT's submissions as to final orders, filed 7 November 2024, [1.3(a)]. 9 Ibid [5.2]. 10 Ibid [1.3(b), (c), (d)]. 11 Ibid [3.2]. 12 Ibid [6.2]. 13 Ibid [8.2]. -- 8 of 10 -- 9 Submissions in reply by the Trust [25] The Trust submitted in reply that, properly construed, Clause 5 of the contract as a whole provides that the costs attributable indirectly or directly to the Village incurred by the Scheme Operator fall within the definition of ‘Operating Expense’ for the purposes of the General Services Charge.14 [26] The Trust submitted as to the allocation of bulk insurance costs that its processes were appropriate and reasonable as follows: 5.4 IRT has adopted what it considers to be an appropriate and reasonable approach to the allocation, attempting to make the process as objective as possible so it cannot be manipulated to suit one area of the business over another. The Applicant has proposed an alternative method. There are likely to be multiple appropriate methods of allocating insurance costs. Ultimately, the decision as to the methodology rests with the scheme operator and in this case, IRT remains of the position that the methodology it has adopted is appropriate. Discussion [27] I have decided that there are difficulties in making Orders with reference to the names of specific insurance policies. [28] Insurance policies are complex commercial documents which have a high degree of sophistication. For convenience, they are given overall titles such as ‘Industrial Special Risk’, or ‘Umbrella Liability’, but these are not a comprehensive description of the contents and effect of the wording of the actual policy. [29] Different insurers use different forms of policies, and the detail of a policy such as ‘Industrial Special Risk’ or ‘Umbrella Liability’ may vary in significant ways between different insurers. [30] I do not consider that it is practical or useful to adopt the names of broad categories of insurance that do, or do not, properly form part of the General Services Charge made to residents. To do so, would create an uncertain outcome which may only lead to further litigation in the future - if for example, the Trust was, in the future, to enter into different policy wording with a different insurer, which has different conditions but the same title. [31] I consider that the central issue in this matter is to confirm the need for a proper and fair process of apportionment of costs to each particular location, and to require an improved information process so that residents can readily identify and understand what insurance costs are included within the General Services Charge being made to them. [32] The Draft Orders submitted variously by the Trust and the Resident contain elements which would serve to effect the improved processes which I consider are required. [33] I accept that the ‘Insurance Explainer’ (which is Annexure A to the submissions filed by the Illawarra Retirement Trust t/as IRT group) would be an appropriate and valuable form of document, and that a document in substantially that form would serve to better inform the residents. 14 Respondent's reply submissions as to final orders, filed 5 December 2024, [3.7]. -- 9 of 10 -- 10 [34] I have accordingly adopted parts of the Draft Orders proposed by both the Trust and the Resident, and have included them in my overall Final Orders. [35] The intent of the Final Orders which I am making is to establish a regime of proper apportionment and disclosure of the insurance cost to the residents. This will hopefully put the residents in a position in the future where they will be able to readily identify what insurance costs have been included in the General Services Charge made to them, and if they wish to challenge a particular charge in any particular year, they would then be able to do so with specificity. [36] I consider it is appropriate that the non-publication orders which I made in the course of the hearing of this matter should continue indefinitely to preserve commercial confidentiality, and consequently the interests of the residents, and will make orders accordingly. Final Orders 1) The Illawarra Retirement Trust t/as IRT Group is to implement processes that fairly apportion the insurance costs properly attributable to IRT Parklands Village in determining the General Services Charge for the IRT Parklands Village. 2) The Illawarra Retirement Trust t/as IRT Group is to establish a methodology for disclosing the bases upon which the insurance costs properly attributable to the IRT Parklands Village have been apportioned. 3) The process of disclosing the bases upon which the insurance costs properly attributable to the IRT Parklands Village is made is to include the Illawarra Retirement Trust t/as IRT Group providing to the residents of IRT Parklands with a document in substantially the same form as the ‘Insurance Explainer’ (which is Annexure A to the submissions filed by the Illawarra Retirement Trust t/as IRT group) which is to be enclosed with the GSC budget each year (amended as necessary) for the year ended 30 June 2026 and thereafter. 4) These Orders apply to General Services Charge budgets from the 2026 financial year onwards. 5) Until further or other Order, publication is prohibited of: a) The materials contained in pages 157-733 attached to the affidavit of Louise Lever dated 29 August 2022; and b) The materials referred to in Order 2 given on 13 May 2022, and publication of an Excel spreadsheet attached to the statement of evidence of Jason Gaudiosi in hardcopy or in any electronic form or held on a USB. -- 10 of 10 --