Armstrong v Kawana Island Retirement Village [2014] QCATA 357

CITATION: Armstrong v Kawana Island Retirement Village [2014] QCATA 357 PARTIES: Les Armstrong (Applicant/Appellant) v Kawana Island Retirement Village (Respondent) APPLICATION NUMBER: APL090-13 MATTER TYPE: Appeals HEARING DATE: 12 June 2014 HEARD AT: Brisbane DECISION OF: Senior Member Stilgoe, OAM Dr Cullen, Member DELIVERED ON: 29 August 2014 DELIVERED AT: Brisbane ORDERS MADE: 1. The appeal is dismissed. CATCHWORDS: APPEAL – RETIREMENT VILLAGE – leave not required as appeal on legal issues only. No error in Tribunal below in finding that photocopier charges are properly classified as general services charges under Retirement Villages Act 1999 (Qld) – Appeal dismissed. Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 142 Retirement Villages Act 1999 (Qld), s 90, Schedule Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 Pickering v McArthur [2005] QCA 294 APPEARANCES and REPRESENTATION (if any): APPLICANT: Mr Armstrong, self represented RESPONDENT: Michael Amerina, Counsel for the respondent -- 1 of 6 -- 2 REASONS FOR DECISION [1] Since 2005, there has been a photocopier in the general administration area of Kawana Island Retirement Village Pty Ltd (the “Village”). The current machine is leased. There is a separate service agreement between the Village and the lessor. The Village charges both the lease payments and the service agreement costs to the general administration fund. [2] Mr Armstrong argued that those costs should not be part of the general service charge. A Member of the tribunal, in a decision dated 11 February 2014, disagreed. Mr Armstrong has appealed that decision. [3] This appeal raises three issues for consideration. The first issue is whether the learned Member below erred in finding that rental payments for a photocopier used in the office of the Village should be accounted for as a general service charges under the Retirement Villages Act 1999 (Qld). As a result of this finding, the learned Member below also concluded that the Village did not contravene s 90 of the Act. [4] The Appellant, Mr Armstrong, says that the photocopier charges should not be accounted for as “general services charges”, but rather as “capital items”. In passing the photocopier charges along to the residents as “general services charges”, Mr Armstrong argues that the Village has contravened s 90 of the Act, which requires that retirement village operators bear responsibility for “capital improvement” costs at the village. [5] During the hearing of the appeal, the Village argued that the Tribunal must consider not merely whether the photocopier is a “capital item”, but also whether it is a “capital improvement” in order to determine this matter. The resolution of this question is determinative as to whether the Village, or the residents, bear the costs of the photocopier. [6] The second issue requiring resolution by the Tribunal is whether, if there has been, as was asserted by Mr Armstrong in the Tribunal below, a contravention of s 90 of the Act by the Village. [7] Finally, if this Tribunal finds that there has been a contravention of s 90 of the Act, the Tribunal must then consider what relief is appropriate. Issued raised by the Appellant on appeal [8] Mr Armstrong argued that the leased copier was ‘plant, machinery or equipment used in the operation of the village’ and therefore a capital item. He pointed out that paragraph (b) of the definition, unlike paragraph (a) did not require ownership by the scheme operator. He says that, because the definition is clear on its face, the learned Member below should have accepted that definition and not considered any other provision of the Act. -- 2 of 6 -- 3 [9] Mr Armstrong also says that the learned Member erred in:  Misconstruing the effect of Jomal P/L v Commercial & Consumer Tribunal & Ors1;  Having regard to general accounting principles;  Failing to identify properly the categories of expenditure contemplated by the Act;  Failing to find that “operation” of a village includes “management and administration”; and  In treating “general services” and “capital items” as mutually exclusive concepts. [10] The issues raised by Mr Armstrong are of a legal nature only, and leave to appeal is therefore not required by s 142 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld), but is as of right. Structure of the Act [11] The relevant portion of s 90 of the Act provides that: (1) A scheme operator is solely responsible for the cost of the retirement village’s capital improvement, including the capital improvement of the retirement village’s communal facilities owned by the scheme operator. [12] “Capital improvement” is defined in the Dictionary Schedule to the Act as: (a) the first time provision of a capital item; and (b) to the extent it is not inconsistent with paragraph (a), includes a thing that is a capital improvement under a ruling under the Taxation Administration Act 1953 (Cwlth) dealing with capital improvement. [13] “Capital items” is also defined in the Dictionary Schedule as: capital items include the following— (a) all buildings and structures located in the retirement village and owned by the scheme operator, including the communal facilities, amenities and accommodation units, other than items that, under the residence contract, are to be maintained, repaired and replaced by the resident; (b) all plant, machinery and equipment used in the operation of the village, other than items that are body corporate property; Examples for paragraph (b)— communal hot water and air conditioning services, kitchen and dining room equipment, community facility furnishings, gardening equipment, village bus or transportation services (c) all village infrastructure owned by the scheme operator. 1 [2009] QCA 326. -- 3 of 6 -- 4 Examples for paragraph (c)— roadways, pathways, drainage, sewerage mains, landscaping, electrical distribution systems, water services and connections and distribution systems [14] “General service” is defined2 as: services supplied, or made available, to all residents of a retirement village. Examples of general services— • management and administration • gardening and general maintenance • a shop or other facility for supplying goods to residents • a service or facility for the recreation or entertainment of residents The Learned Member was correct to consider the context of the Act [15] To the extent that Mr Armstrong argues that the learned Member was to give a literal meaning, as opposed to a purposive meaning, to “capital item” in the Act, he is wrong. [16] It is simply not possible to read the definition of “capital items” in isolation. The learned Member had to consider the term in context. That much is clear from Jomal3: The Act also seeks “to encourage the continued growth and viability of the retirement village industry in the State”, and “to provide a clear regulatory framework to ensure certainty for the retirement village industry in planning for future expansion”. As Gleeson CJ observed in Carr v Western Australia, legislation rarely pursues a single purpose at all costs, and the general rule of interpretation which prefers a construction that would promote the purpose or object underlying an Act is of little assistance when legislation strikes a balance between [17] Mr Armstrong relied on the Applegarth J’s comments in Jomal4: If the statutory definition of “capital items” cannot be uniformly applied on all of the occasions in which that expression is used throughout the Act, that does not justify the conclusion that it should not be applied in respect of s 97 concerning the use of the MRF, if it is clear that the definition is to apply in that context. The proper approach is to assume that the expression “capital items” is used in s 97 as defined, and to ask whether a contrary intention can be shown. It may be appropriate to consider the legislation as a whole. However, the existence of other provisions in the Act in which a contrary intention appears, making it appropriate to depart from the definition in those contexts, does not, of itself, justify the conclusion that the statutory definition does not apply in respect of s 97. The same principles apply in respect of the application of the statutory definition in respect of s 91 concerning the use of the CRF. 2 Supra. 3 Supra at [50]. 4 Supra at [70]. -- 4 of 6 -- 5 [18] We do not think that Jomal lends support to the view contended for by Mr Armstrong, but rather supports a view that the learned Member below was correct to consider that the Act creates a strict dichotomy between capital and expenses. [19] Australian High Court Justice Susan Crennan explains the need to give statutes a purposive meaning in her paper “Statutes and the contemporary search for meaning”, delivered to the Statute Law Society in London, in 2010. In her paper, she cites Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation,5 and says: It is an enduring authority, much relied on since, for the proposition that a literal reading of a statute may be displaced by another construction where a literal meaning will lead to absurd or inconvenient results. [20] The literal meaning of the definition of “capital item” argued for by Mr Armstong would have the unusual result of the leased photocopier, which is used by staff and residents, to transform into an item for which the Village must bear all costs, for all perpetuity, on the basis that there has been a copier at the Village since 2005. Mr Armstrong argues that the definition of “capital improvement” means that the photocopier (which he says is a capital item) means it became a “capital improvement” in 2005 when it was first acquired. Provision of the photocopier is a “general service” [21] The learned Member below was correct to apply a purposive approach to her interpretation of the Act, and in asking the question as to what the language of the Act means, having regard to the purpose at which it was directed. In her decision, the learned Member correctly looks to the meaning of “general service” in the context of the Act, and finds that as photocopying services are made available to all Village residents, they are a “general service”. We do not find error in this approach. [22] The learned Member then considers that it is reasonable to ‘maintain the distinctions between management, administration, and operational matters’ in the Act, and concludes that s 90 of the Act relates to asset expenditure and not revenue expenditure related to the management or administration of the Village. The photocopier is not a capital item [23] Even if the learned Member was not correct in finding that that provision of the photocopier via a leasing arrangement is a “general service,” we still find that the photocopier is not a “capital item”. [24] We say this because the photocopier is not used in the “operation” of the Village when one has regard to the Act as a whole. The definition of “capital item” (in section b) refers to “operation”. Provision of a photocopier 5 (1981) 147 CLR 297. -- 5 of 6 -- 6 is not necessary for the Village to “operate”, but might (as the learned Member says below) be beneficial for management of the Village. [25] Section 90 clearly applies to the acquisition of infrastructure that enables the Village to operate. It is a “bricks and mortar” provision as is apparent from the examples included within the section itself. There is no “capital improvement” in a leased photocopier. [26] Mr Armstrong argued that the definition extends beyond “bricks and mortar” items to include items such as a village bus, or mowing equipment. We agree that these items can be capital items but that does not mean that all items used in the operation of a retirement village must, therefore, be capital items. A bus, or a mower, can only be used directly in the operation of the village; they are not management or administration tools. The test is not simply: “can it be a capital item?”. Rather the test is: “can it be a capital item” and “is it a capital item used in the operation of the village (as opposed to in the management or administration of the village?”. Order [27] In summary, the answers to the three issues posed by this appeal are: a) The learned Member did not err in finding that rental payments for a photocopier should be accounted as a general service charge. b) Because we agree with the learned Member’s findings, the Village has not breached s 90 of the Act. c) Because there is no breach of s 90, there is no need for us to consider the issue of compensation. [28] As the learned Member has, in our view, purposively interpreted the Act, we do not need to consider the issue relating to relief. The appeal is dismissed. -- 6 of 6 --