Caplick one Executor of The Estate of Caplick v Milstern Retirement Services Pty Ltd and Anor (No 1) [2011] QCAT 720

CITATION: Caplick one Executor of The Estate of Caplick v Milstern Retirement Services Pty Ltd and Anor (No 1) [2011] QCAT 720 PARTIES: Lindsay Caplick one Executor of The Estate of Hazel Millicent Caplick v Milstern Retirement Services Pty Ltd Milstern Retirement Living Pty Ltd APPLICATION NUMBER: VH008-09 MATTER TYPE: Other civil dispute matters HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Ms Ann Fitzpatrick, Member DELIVERED ON: 19 July 2011 DELIVERED AT: Brisbane ORDERS MADE: 1. Within 14 days of the date of this Order, the second respondent at its cost, engage Taylor Byrne, Valuers, Hervey Bay, to conduct a valuation of the right to reside and immediately thereafter provide a copy of its instructions to the solicitors for the applicant; 2. Within a further 7 days, the applicant makes any submissions to Taylor Byrne it considers relevant. 3. Within 7 days of receipt of the valuation, the second respondent file and serve: (a) a copy of the valuation; and (b) an estimate of the exit entitlement, together with supporting documentation for the costs, charges and fees forming part of the calculation. 4. The parties attend a compulsory conference in the Tribunal on a date allocated by the Tribunal after receipt of the material the subject of this Order. CATCHWORDS: Exit entitlement Retirement Villages Act 1999 -- 1 of 22 -- 2 APPEARANCES and REPRESENTATION (if any): This matter was heard on the papers, pursuant to section 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). REASONS FOR DECISION Introduction [1] This application is made pursuant to the Retirement Villages Act 1999 (the RVA). [2] The late Hazel Millicent Caplick and her late husband, Reinhold Otto Caplick, entered into a residence contract, on 18 December, 1989 for the leasehold of Unit 13, 418-429 Boat Harbour Drive, Scarness, in the Urimbirra Retirement Village. [3] Oxden Pty Ltd was a previous name for Milstern Retirement Living Pty Ltd ACN010661079, which is registered as scheme operator. That company is also the registered owner of the land on which the Unit is situated. The Village Manager is the first respondent, Milstern Retirement Services Pty Ltd ACN002053018. [4] This application is brought by one of the executors of the Estate of Hazel Caplick, Lindsay Mervyn Caplick, the son of the late Mrs Caplick. [5] This application was originally filed on 20 August, 2009 in the Commercial and Consumer Tribunal. Subsequently amended pleadings have been filed by all parties. The applicant seeks the following orders: (a) an independent valuer be appointed, pursuant to section 194(3) of the RVA, to provide a valuation of the right to reside in the unit; (b) the second respondent pay to the applicant the exit entitlement based on the valuation, within 30 days of the second respondent receiving the valuation; and (c) the first and second respondents pay the applicant’s costs. [6] The applicant asserts that the Estate is entitled to the orders sought pursuant to section 171 of the RVA, because it has been materially prejudiced by a contravention or failure on the part of the respondent to comply with section 67(2) of the RVA. [7] The respondents seek the following orders: (a) an independent valuation be obtained under section 70(2) of the RVA; and (b) each party bear their own costs. [8] In the respondents’ amended submissions dated 23 August, 2010, they agree to pay all costs associated with the engagement of an agreed local valuer (not Knight Frank). They further agree that an updated valuation -- 2 of 22 -- 3 will be deemed the agreed resale value of the right to reside. At paragraph 57(b) of the amended submissions the respondents agree to purchase the unit at an agreed fair market value and at paragraph 57(d)(ii) suggest that it would be a just order that they provide all assistance to the Estate to market and sell the unit at the agreed resale value with the exit entitlement to be paid within 14 days of the sale settlement of the unit. Background facts [9] The late Hazel and Reinhold Caplick entered into a residence contract with the second respondent’s predecessor Oxden Pty Ltd, on 18 December, 1989. [10] At the time the lease was entered into, the Retirement Villages Act 1988 was in force. That Act was repealed by the RVA. [11] Pursuant to the lease, the Caplicks paid an “ingoing contribution” of $62,000.00. [12] After Reinhold Caplick passed away, Hazel Caplick continued to reside at Unit 13 until 25 March, 2005. [13] The respondents say that they did not receive any communication about Mrs Caplick’s intention to return after her departure. Consequently her right to reside was terminated pursuant to section 53 of the RVA, effective 20 May, 2006, in accordance with the notice of termination given on 20 March, 2006 by McDuff and Daniel, lawyers for the respondents. [14] The parties agree that the date of termination of the right to reside was 20 May, 2006. [15] Thereafter Lindsay Caplick negotiated with the first respondent as manager of the Village for the respondent to purchase the right to reside. The second respondent says that it provided a valuation of $55,000.00 for the unit from local valuers Cupitt & Associates. It says this should have been the agreed resale value but it was not accepted by the applicant. The second respondent says it would have purchased the unit at that price and paid the exit entitlement. [16] Following a request by both parties, the Chief Executive of the Department of Tourism Fair Trading & Wine Industry Development appointed Knight Frank as a valuer under section 70 of the RVA for the purpose of valuing the right to reside in Unit 13. [17] In September, 2006, Mr Gordon Price of Knight Frank valued the right to reside at $109,500, subject to partial refurbishment. [18] By letter, dated 26 September, 2006, McDuff & Daniel forwarded a copy of the Knight Frank valuation to the solicitors for Mrs Holland and said: “In accordance with the Act the valuations are now deemed to be the agreed re-sale value of the right to reside. Please advise if your client has any interested parties.” -- 3 of 22 -- 4 [19] The second respondent says that the valuation was deemed to be the agreed resale value of the right to reside in accordance with the Act, but that it never agreed to the valuation as fair market value. The second respondent has said that no estate agents were prepared to handle the sale at the valuation and no buyers accepted it. There is no supporting evidence for this contention. [20] On 28 September, 2006, Butler McDermott & Egan, Solicitors for Mrs Caplick wrote to McDuff & Daniel saying “We look forward to your client purchasing the Unit in accordance with the Valuation”. [21] By letter dated 29 September, 2006, McDuff & Daniel advised their client had no interest in purchasing the unit. [22] On 2 February, 2007 McDuff & Daniel asked if Mrs Caplick intended to list the unit with any real estate agents and sought advice generally in relation to her intention in relation to sale of the unit. [23] On 6 February, 2007 Butler McDermott replied advising their client was making appropriate enquiries in relation to the sale of the unit, but expressed the view the owner should purchase the unit for the valuation price. The solicitors complained about the conduct of the owner. [24] On 14 February, the second respondent wrote to Butler McDermott advising “we are not interested in purchasing any Urimbirra units at any price.” [25] On 2 April, 2007 Hazel Caplick passed away. [26] On 26 June, 2007 McDuff & Daniel forwarded an auction proposal to Butler McDermott stating, “As the matter is now totally stalled we intend proceeding with the auction option”. [27] There does not appear to have been any further correspondence between the parties until 10 November, 2008 when Butler McDermott sent a facsimile transmission to Milstern Retirement Services Pty Ltd requesting pursuant to section 67 of the RVA that the re-sale value of the right to reside be reconsidered. Details of attempts to list the Unit for sale were also sought. [28] By further facsimile transmission dated 10 November, 2008 Butler McDermott sought from the second respondent an estimate of their client’s exit entitlement as at the date of the letter, pursuant to section 54 of the RVA. [29] Despite follow up letters on 23 December, 2008 and 9 March, 2009, no response was received. As a result this application was filed. [30] The second respondent denies receiving these letters. [31] As part of the proceedings the respondent delivered a valuation of Unit 13 by Cupitt & Associates Valuers Pty Ltd dated 30 April, 2009 certifying an “as is” value of $75,000.00 and “on completion” value of $140,000.00. -- 4 of 22 -- 5 [32] A mediation occurred on 16 November, 2009. The matter did not resolve. [33] Thereafter it was ordered that the matter be heard on the papers. Relevant clauses of the lease [34] The decision of the Court of Appeal in Williams v Carlyle Villages Pty Ltd (2009) QCA 301 emphasized the primacy of the residence contract and noted that although the RVA required certain matters to be addressed in the contract, the RVA did not prescribe the content of the residence contract. [35] In this matter, the residence contract is the lease. [36] The lease provides: Section 12 – Default of Lessee and Forfeiture 12.4 DEFINITION OF DEFAULT. The Lessee is deemed to make default hereunder in any of the following circumstances namely: “12.4.7 Unoccupied without consent if for any reason whatsoever the demised premises shall have been unoccupied by the Lessee without the consent of the Lessor (which consent shall not be arbitrarily or capriciously withheld) for a continuous period of not less than (3) three months;” “12.6 FORFEITURE OF LEASE. Subject to the provision of section 124 of the Property Law Act 1974 if the Lessee shall have made default as aforesaid the Lessor may at any time thereafter at his option: 12.6.2. Termination by notice. By notice in writing to the Lessee terminate this Lease and from the date of giving such notice this Lease shall be terminated.” SECTION 15 – RELETTING DEFERRED MANAGEMENT FEE ETC. 15.1 RELETTING ON TERMINATION. The lessor covenants and agrees that if this Lease is validly terminated by either party pursuant to the terms hereof or by operation of law or otherwise howsoever, then the Lessor shall use its best endeavours as soon as is practicable after the termination date to re-let the demised premises upon terms substantially the same as in this Lease or substantially upon the then current terms being imposed by the Lessor in respect of Leases of similar nature and standard as the demised premises and that in particular and without in any way limiting the generality of the aforegoing the Lessor shall use his best endeavours to obtain the best available price or premium for the re-letting of the demised premises as aforesaid. 15.2 PAYMENT TO LESSEE. Upon the demised premises being re-let by the Lessor as aforesaid the Lessor, by no later than one (1) month from the date on which the gross price or premium realised by the Lessor for such re-letting (hereinafter called “the sale price”) is paid and released unconditionally to the Lessor by or on behalf of the prospective Lessee in exchange for a grant of Lease of the demised premises by the Lessor -- 5 of 22 -- 6 upon or substantially upon the current terms of Lease imposed by the Lessor as aforesaid and in registrable form, shall pay to the Lessee if he is able to provide a valid receipt therefor and if he is not so able then to the Public Trustee pursuant to the provisions of the Public Trustee Act 1978 to hold for the Lessee or his personal representatives or for such other person or persons entitled thereto pursuant to the provisions of the Public Trustee Act 1978 an amount equal to the sale price less:- 15.2.1 The deferred management fee; 15.2.2 Any rental or other moneys owing by the Lessee to the Lessor whether under this Lease or otherwise; 15.2.3 One third (331/3%) of the amount (if any) by which the sale price exceeds the amount set forth in Part Four of the First Appendix hereto; (Note the amount referred to is $62,000.00) 15.2.4 All selling and letting commission, advertising fees, legal costs and other costs and expenses reasonably incurred by the Lessor or his agent in relation to the re-letting of the demised premises as aforesaid. 15.2.5 Any repairs and maintenance which is not due to fair wear and tear.” Relevant legislation [37] The lease between the applicant and the second respondent, known by its earlier name, was entered into on 18 December, 1989. At that time the relevant legislation governing retirement villages was the Retirement Villages Act 1988. That Act was repealed by the Retirement Villages Act 1999 (the RVA). The RVA contained transitional provisions such that an existing retirement village scheme is taken to be registered under the RVA if the scheme was approved under the repealed Act and the approval is in force. [38] The RVA was amended by the Retirement Villages Amendment Act 2006 No. 6. I intend to refer to the provisions of the RVA in the form it took as at the date of termination of the right of residence on 20 May, 2006, as being the applicable legislation. The following sections are relevant. [39] “Section 10 – What is a residence contract (1) A residence contract is 1 or more written contracts, other than an excluded contract, about residence in a retirement village entered into between a person and the scheme operator… (2) To be a residence contract a contract must- (a) either- (i) purport to give a person, or give rise to a person having, an exclusive right to reside in an accommodation unit in the retirement village; or -- 6 of 22 -- 7 (ii) provide for, or give rise to, obligations on a person in relation to the person’s or someone else’s residence in the retirement village; and (b) purport to give a person, or give rise to a person having, a right in common with other residents in the retirement village, to use and enjoy the retirement village’s communal facilities; and (c) contain or incorporate – (i) a service agreement … (d) restrict the way in which, or the persons to whom- (i) the right to reside in the retirement village may be disposed of during the resident’s lifetime; …” [40] “Section 11 - What is an existing residence contract An existing residence contract is a residence contract existing immediately before the commencement of this Act.” [41] “Section 13 – What is a public information document A public information document, for a stated retirement village scheme, is a document, in the approved form under section 74, giving details about the retirement village scheme.” [42] “Section 14 – What is an ingoing contribution (1) An ingoing contribution is the amount payable by a person under a residence contract to secure the person’s, or someone else’s, right to reside in a retirement village, but does not include a recurrent payment for rent, fees or charges. (2) It is immaterial whether – (a) the right to reside in the village is enforceable or not; or (b) the payment alone secures the right, or something else is also required to secure it.” [43] “Section 15 – What is an exit fee (1) An exit fee is the amount that a resident may be liable to pay to, or credit the account of a scheme operator under a residence contract arising from – (a) the resident ceasing to reside in the accommodation unit to which the contract relates; or (b) the settlement of the sale of the right to reside in the accommodation unit. -- 7 of 22 -- 8 (2) The exit fee for a residence contract, including an existing residence contract, that a resident may be liable to pay to, or credit the account of, the scheme operator is to be calculated as at – (a) the day the resident ceases to reside in the accommodation unit to which the residence contract relates; or… (3) Subsection (2) applies despite anything to the contrary in an existing residence contract.” [44] “Section 16 – what is an exit entitlement (1) An exit entitlement is the amount that a scheme operator may be liable to pay to or credit the account of, a former resident under a residence contract arising from – (a) the resident ceasing to reside in the accommodation unit to which the contract relates; or (b) the settlement of the sale of the right to reside in the accommodation unit. (2) In this section, a reference to a former resident includes a reference to a person, other than a scheme operator, who enters into a residence contract for the purpose of giving someone else a right to reside in the retirement village.” [45] “Section 21 – what is a retirement village dispute (1) A retirement village dispute is a dispute between a scheme operator and a resident of a retirement village about the parties’ rights and obligations under the resident’s residence contract or this Act. (2) For subsection (1), a retirement village dispute includes a dispute about compliance by a scheme operator or a resident with this Act, whether or not a particular failure to comply is an offence against this Act. (3) In this section – Resident includes a former resident.” [46] “Section 22 – What is a retirement village issue A retirement village issue is – (a) a retirement village dispute; or (b) an application for an order under sections 169 to 171 or 173.” [47] “Section 23 – Application of Act -- 8 of 22 -- 9 This Act applies to – (a) a retirement village scheme, including a scheme for a retirement village to which the Body Corporate and Community Management Act 1997 applies, the scheme operator and inducements and invitations to enter into the scheme if – (i) the retirement village is, or is to be, situated in the State, irrespective of where the scheme is operated or inducements or invitations to enter into the scheme are given or published; or (ii) the scheme is operated in the State, irrespective of where the retirement village is, or is to be, situated or inducements or invitations to enter into the scheme are given or published; and (b) a residence contract entered into before or after the commencement of this section, unless this Act states otherwise.” [48] “Section 37 – Public information document forms part of residence contract (1) A public information document for each resident is taken to form part of the resident’s residence contract to which the public information document relates… (3) If a provision of a public information document is inconsistent with a provision of any other part of the residence contract, the provision that is more beneficial to the resident prevails. (4) If a provision of a public information document is inconsistent with a provision of this Act, the provision of this Act prevails.” [49] “Section 52 – Termination by resident (1) A resident may terminate the resident’s right to reside in a retirement village by 1 month’s written notice given to the scheme operator.” [50] “Section 54 – Resident may ask for estimate statement of resident’s exit entitlement (1) This section applies if a resident gives a scheme operator a written notice – (a) stating the resident is considering terminating the resident’s right to reside in the retirement village under section 52; and (b) asking the operator to give the resident a written estimate of the resident’s exit entitlement as at the date of the notice. (2) The scheme operator must comply with the request within 14 days after it is given…” -- 9 of 22 -- 10 [51] “Section 57 – Application of div 5 (Reselling resident’s right to reside) (1) This division applies if a resident’s right to reside under a residence contract, including an existing residence contract, in an accommodation unit in a retirement village is terminated under this Act. (2) This division applies despite anything to the contrary in an existing residence contract.” [52] “Section 60 – Scheme operator and former resident to agree on resale value of accommodation unit (1) Within 30 days after the termination date, the former resident and the scheme operator are to negotiate in good faith and, if possible, agree in writing on the resale value of the right to reside in the accommodation unit. (2) If the former resident and the scheme operator can not agree on the resale value of the accommodation unit the scheme operator is to obtain a valuation of the right to reside in the unit from a valuer within a further 14 days. (3) A valuation obtained under subsection (2) is taken to be the agreed resale value of the right to reside in the accommodation unit. [53] “Section 62 – Who pays for work in leasehold or licence scheme … (2) If the former resident obtained the interest before the commencement of the 2006 amendment Act, section 26, the cost of the labour and materials for the reinstatement work for the accommodation unit must be paid by – (a) to the extent the reinstatement work is required because the former resident caused accelerated wear to the accommodation unit’s interior or deliberate damage to the accommodation unit – the former resident; or… (c) otherwise – … (ii) for an existing residence contract – the former resident and the scheme operator in the same proportion as they are to share the gross ingoing contribution on the sale of the right to reside, as provided for in the residence contract.” [54] “Section 63 – When former resident’s exit entitlement payable -- 10 of 22 -- 11 (1) A scheme operator must pay the exit entitlement of a former resident to the person entitled to receive it on or before the sooner of – (a) the day when it must be paid under the former resident’s residence contract; or (b) 14 days after the settlement day… (3) At the same time as an exit entitlement is paid under this section, the scheme operator must give the former resident a written statement showing how the exit entitlement was worked out and the particulars of any of the following that are payable by the former resident - …” (4) In this section – Settlement day means the day on which the sale of the right to reside, to a new resident or the scheme operator, is settled.” [55] “Section 64 – Units not sold within 6 months (1) This section applies if – (a) a former resident’s right to reside in a particular accommodation unit is not sold within 6 months after the termination date; and (b) the former resident has not been paid an exit entitlement under section 63. (2) The former resident may engage a real estate agent to effect the sale of the right to reside in the accommodation unit.” [56] “Section 66 – Accepting offers at less than agreed resale value (1) If a scheme operator accepts an offer for a right to reside less than the agreed value for the right, the former resident’s exit entitlement is to be worked out as if the right to reside was sold at the agreed value. (2) If a former resident accepts an offer for a right to reside less than the agreed value, the former resident’s exit entitlement is to be worked out on the amount of the offer.” [57] “Section 67 – Updating agreed resale value (1) This section applies if – (a) a former resident’s right to reside in a particular accommodation unit is not sold within 6 months after the termination date; and -- 11 of 22 -- 12 (b) the former resident has not been paid an exit entitlement under section 63. (2) The former resident and the scheme operator are to reconsider the resale value of the right to reside at least every 3 months and, if possible, agree in writing on a new resale value, which may be the same value. (3) If the former resident and the scheme operator can not agree on the resale value of the accommodation unit, the operator is to obtain a valuation of the right to reside in the unit from a valuer within a further 14 days. (4) A valuation obtained under subsection (3) is taken to be the agreed resale value of the right to reside in the accommodation unit.” [58] “Section 70 – Valuer (1) For this division, the valuer of the resale value of the right to reside in the unit must be a person who – (a) is a registered valuer; and (b) is agreed on by the scheme operator and the former resident. (2) If the scheme operator and the former resident can not agree on the valuer – (a) the scheme operator or the former resident must immediately tell the chief executive by written notice; and (b) the valuer is to be a registered valuer decided by the chief executive within 14 days after the chief executive receives the notice mentioned in paragraph (a)…” [59] “Section 171 – former resident may apply for order for payment of exit entitlement (1) This section applies if – (a) a retirement village scheme operator fails to comply with section 58 (2), 60(2), 65 or 67(2); and (b) a former resident of the retirement village is materially prejudiced by the failure. (2) The former resident may apply to the tribunal for an order that the operator pay to the former resident the former resident’s exit entitlement.” [60] “Section 191 – Tribunal orders generally -- 12 of 22 -- 13 (1) The tribunal may make the orders the tribunal considers to be just to resolve a retirement village issue. (2) For example, the tribunal may make any 1 or more of the following orders – (a) an order for a party to the issue to do, or not to do, anything (an enforcement order); (b) an order requiring a party to the issue to pay an amount (including an amount of compensation ) to a specified person (a payment order); (c) an order that a party to the issue is not required to pay an amount to a specified person; (d) if the issue is a retirement village dispute – (i) an order setting aside the mediation agreement between the parties to the dispute; or (ii) an order giving effect to a settlement agreed on by the parties to the dispute. (3) An order may specify a time for compliance with it. (4) Without limiting subsection (1), this section applies if a resident applies for a tribunal order under section 169, 170 or 171.” [61] “Section 194 – Tribunal orders under section 171 (1) This section applies if a resident applies for a tribunal order under section 171. (2) In ordering a scheme operator to pay the exit entitlement to the former resident, the tribunal must base the exit entitlement on the following – (a) if the resale value of the right to reside in the unit has been agreed under section 60 or 67 – that value; or (b) if the resale value of the right to reside in the unit has not been agreed – the resale value of the right to reside in the unit decided by the tribunal under subsection (3). (3) For subsection (2) (b), the tribunal must obtain an independent valuation of the right to reside in the unit from a valuer.” [62] “Section 210 – Tribunal’s jurisdiction (1) The tribunal has jurisdiction to hear retirement village issues, other than a retirement village dispute – (a) … -- 13 of 22 -- 14 (b) if the amount, value or damages in dispute is more than the monetary limit of the District Court within the meaning of the district Court Act 1967, section 68…” [63] “Section 237 – Retirement Villages Act 1988 references In an Act or document, a reference to the Retirement Villages Act 1988 may, if the context permits, be taken as a reference to this Act.” [64] “Section 237A – Exit fees (1) This section applies if, before the commencement of this section – (a) a resident had ceased residing in an accommodation unit; and (b) the resident had not paid the exit fee under the residence contract to the scheme operator. (2) For calculating the exit fee the resident may be liable to pay to, or credit the account of, the scheme operator, section 15 and any relevant definitions, as in force immediately before the commencement, continue to have effect. Applicant’s and Respondents’ submissions Applicant [65] The applicant relies upon sections 171, 191 and 194(3) of the RVA for the Orders she seeks. [66] The applicant says that it may seek an order from the Tribunal under section 171 of the RVA for an order for payment of the exit entitlement where : there has been non-compliance with section 67(2) of the RVA (by the second respondent failing to reconsider the resale value at least every 3 months); and the applicant has been materially prejudiced by the failure, in that the executor has been unable to sell the right to reside of Hazel Caplick and apply the funds from the sale in accordance with her will. [67] The applicant submits that the Tribunal must under section 194(3) of the RVA obtain an independent valuation of the right to reside in the unit from a valuer, before the Tribunal can order the second respondent to pay the applicant the exit entitlement. The applicant says that given the history an updated valuation by Knight Frank would be appropriate. Respondents -- 14 of 22 -- 15 [68] The respondents in their amended submissions filed 24 August, 2010, submit that the second respondent has no obligation to pay the applicant the exit entitlement based on section 171 of the RVA as the respondent has not failed to comply with sections 58(2), 60(2), 65 or 67(2). In relation to section 67(2) it is said that the respondents attempted to reach agreement with the applicant through communications with their lawyers. [69] The second respondent says that section 194 of the RVA does not apply as the respondent has not failed to comply with section 171. [70] However, the second respondent agrees to an independent valuation obtained under section 70(2) of the RVA. That involves notification to the Chief Executive by the parties, but that is not further addressed in the submissions. [71] The second respondent opposes the engagement of Gordon Price of Brisbane based Knight Frank to provide an updated valuation. The second respondent says that Knight Frank are not experienced in the local vicinity and the valuations provided by Mr Price in September, 2006 were unrealistic. It said that the valuation: (a) failed to mention previous sales in Urimbirra Retirement Village including sales through estate agents, including Mr Green’s unit sold by an estate agent on the open market for $65,000.00 in 2002; (b) failed to consider a statement in the Public Information Document that says the retirement village will be closing down; (c) failed to consider the recent and ongoing negative publicity that Urimbirra had received; (d) failed to consider all factors of the leasehold interest including the uncertainty of the lease, the tenure of the lease, the prospect of maintaining equity/value in any lease negotiation, etc; (e) failed to discuss with the Village manager the conditions prevailing in the Village or the effect the bad publicity had including Mr Boyce telling the Retirement Village Association that Urimbirra was the “worst retirement village in Queensland”; and (f) the valuations compared superior units, particularly those outside Hervey Bay, which are not directly comparable and valued units with buyback provisions and church-owned units. [72] The second respondent has submitted: that it will engage one of three nominated local valuers; that it will pay all costs associated with the engagement of an agreed alternative local valuer; and -- 15 of 22 -- 16 that the valuation be deemed the agreed resale value of the right to reside of the Unit. Applicant [73] The applicant submits that in accordance with section 63(1) of the RVA the scheme operator must pay the exit entitlement on or before the sooner of: (a) the day when it must be paid under the former resident’s contract; or (b) 14 days after the settlement day (being the day of settlement of sale of the right to reside). [74] It submits that under section 63(2) of the RVA the scheme operator could pay the exit entitlement before settlement day, if the value of the right to reside is agreed. The Knight Frank valuation was the deemed agreed value of the resale value, yet the first respondent withdrew its previous offer to purchase the unit. [75] The applicant says that it is accepted that the right to reside has not sold, but it is submitted this is solely due to the conduct of the respondents. Drawing generally from the applicant’s material, I take these submissions to mean that the respondents have not actively marketed the right to reside and that their publication of an intention to close the Village has deterred potential buyers. I note in Exhibit PGB 28 to the affidavit of Peter Boyce, sworn 26 February, 2010, that certain allegations are made against the owner, including that it has deliberately compressed the market in relation the sale of the units, it has rented out a significant number of units that it purchased from residents and is not selling them as part of the Retirement Village Scheme and by not agreeing to pay the market value, is deliberately trying to force the applicant out at a much reduced price. It is said that the actions of the respondents have resulted in the applicant suffering material prejudice, being the inability to sell the right to reside and to enjoy the exit entitlement. Respondents [76] The second respondent says that it had no intention of closing down Urimbirra but was directed by the Office of Fair Trading to include the statement in the 2006 Public Information Document. It says the unit has not sold because the applicant refused to accept a fair market price. Estate agents who handled the unit were unable to obtain the price the applicant wanted. [77] The respondents say that the applicant has not suffered any material prejudice as a result of a failure by the respondents to comply with the Act. Material prejudice suffered by the applicant is a result of the applicant’s own action as it: (a) failed to take steps to sell the right to reside in the unit; -- 16 of 22 -- 17 (b) failed to provide consent to allow the respondent to auction the right to reside in the unit; and (c) insisted on an unattainable price for the sale of the unit. [78] The second respondent says that even though the applicant did not request the respondent to sell their unit the respondent made all reasonable attempts to assist the applicant. The respondent: (a) obtained valuations in 2006 and again in 2009 from local valuer Cupitt & Associates Valuers Pty Ltd in Hervey Bay; (b) offered to purchase the units at the 2006 valuation; (c) undertook an advertising campaign for the unit through the local newspapers; (d) undertook to pay for the costs of advertising and auctioning of the unit in 2007, an offer that was refused by the applicant; and (e) made numerous offers to the applicant to purchase the unit for between $55,000 and $60,000. All offers have been refused. [79] The second respondent says it agrees with the engagement of an agreed alternative local valuer in order to obtain a realistic valuation for the units and will pay all associated costs. It objects to the appointment of Knight Frank for the reasons set out earlier. [80] The second respondent says that it has no obligation to purchase the unit however, it is prepared to purchase the unit at an agreed fair market value. [81] As to the background of earlier purchases of other units by the owner, the second respondent said that in 1988 the Residents’ Committee wrote to the respondent requesting it purchase 18 units for sale that had accumulated as a result of years of negative publicity about Urimbirra. The respondent commenced purchasing Urimbirra units. From 2003 to 2009 units were purchased for prices between $45,000 and $60,000. [82] The second respondent says that it is just that consideration is given to the fact that respondent has not been able to sell the applicant’s unit as the applicant has refused to agree on a fair market price. It is just to order that the process for the sale of the applicant’s unit follows the lease and the Act. That is: (a) An agreed resale value be determined by an independent valuer other than Knight Frank. (b) The respondent provide all assistance to the Estate to market and sell the unit at the agreed resale value. (c) The respondent pay to the Estate the exit entitlement within 14 days of the sale settlement of the unit. Applicant -- 17 of 22 -- 18 [83] The applicant says that the Tribunal has the jurisdiction to order the second respondent to pay her the exit entitlement based on an updated valuation obtained in furtherance of an order made under section 171 of the RVA. This power is said to be given by section 191 of the RVA and section 171 of the RVA. The applicant refers to the passage in Filmer’s casei, where Member Spender said: “In my view, section 191 is not a grant of power in itself, but it confers general power in discharge of the Tribunal’s jurisdiction conferred elsewhere in the RVA or as conferred by the CCT Act” Respondent [84] The respondents say that the second respondent has no obligation to pay the applicant the exit entitlement based on section 171 of the Act as the respondent has not failed to comply with the sections of the Act referred to in section 171, including, relevantly, section 67(2). [85] Finally, the respondents say that the Tribunal ought not make the orders sought by the applicant because they are not “just”. Applicant’s and respondents’ further submissions in response to the Tribunal’s directions [86] The further submissions made in response to the Tribunal’s 14 July, 2010 directions were to the effect that: (a) The applicant said that the RVA currently in force should be applied in determining the outcome of this application, but in any event the relevant sections are the same as at the date of termination of the right of residence on 20 May, 2006. The respondents say that the RVA applies. (b) The applicant and respondents say that the Public Information Document (PID), exhibit LMC5 to the affidavit of Lindsay Caplick, sworn 25 February, 2010 forms part of the residence contract, in accordance with section 37 of the RVA and that the applicant is entitled to use the most beneficial method in the Lease or Public Information Document to calculate the exit entitlement. (c) The applicants and the respondents say that the provision of the lease which requires arbitration before the commencement of any action at law predated the RVA and that it is inconsistent with the RVA which does not require arbitration before an application may be brought under section 171. Accordingly it is of no force, because of section 45(2) RVA which provides that a provision of a residence contract is of no effect to the extent that it is inconsistent with the RVA. Jurisdiction of this Tribunal [87] This application was filed in the former Commercial and Consumer Tribunal. Relevant functions of that Tribunal have been taken over by the Queensland Civil and Administrative Tribunal (QCAT). Pursuant to section -- 18 of 22 -- 19 271 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act), QCAT has and only has the functions that the former Commercial and Consumer Tribunal had in relation to an existing matter such as this, and can only make a decision the former Tribunal could have made in relation to the matter. [88] Section 8 of the Commercial and Consumer Tribunal Act 2003 provides that the Tribunal has jurisdiction to deal with matters under an empowering Act. The RVA is an empowering Act. [89] Section 57 of the RVA provides that division 5 of the RVA, which relates to reselling the resident’s right to reside, applies despite anything to the contrary in an existing residence contract. “Existing residence contract” is defined by section 11 of the RVA as a residence contract existing immediately before the commencement of the RVA. That definition will capture the lease in question. [90] Section 209 of the RVA provides that the Tribunal’s function is to hear “retirement village issues”. This matter is a retirement village issue as defined by section 22 of the RVA, being both a retirement village dispute and an application for an order under section 171 of the RVA. [91] Section 21 of the RVA defines “retirement village dispute” to include a dispute between a scheme operator and a resident of a retirement village about the parties’ rights and obligations under the resident’s residence contract or the RVA and a dispute about compliance by a scheme operator or a resident with the RVA. Nature of the dispute, findings and orders [92] In essence this dispute relates to the fact that the right to reside in Unit 13 at the Urimbirra Retirement Village terminated over 5 years ago. The right to reside in the unit has not been sold. There is no current agreed resale value which could underpin a process of sale or auction of the unit and be used in the calculation of the exit entitlement under section 66 of the RVA. Unless the scheme operator agrees to do so, or this Tribunal orders the scheme operator to pay the exit entitlement, there is no contractual or statutory obligation on the scheme operator to pay the exit entitlement without settlement of a sale of the right to reside. [93] The applicant seeks orders arising out of the retirement village issue, pursuant to section 171 of the RVA which gives a former resident an entitlement to apply for an order that the operator pay the former resident her exit entitlement if the scheme operator fails to comply with section 67(2) of the RVA and the former resident is materially prejudiced by the failure. [94] The applicant relies on its lawyer’s letter to the retirement village owner on 10 November, 2008, requesting it reconsider the re-sale value of the right to reside in the Unit, pursuant to section 67 of the RVA as evidence of a failure to comply with section 67(2) of the RVA. -- 19 of 22 -- 20 [95] The lawyer for the applicant, Mr Boyce, swears in his affidavit made on 26 February, 2010, that the letter was forwarded by facsimile transmission to Milstern Retirement Services Pty Ltd. Ms Phillips, the director of Milstern Retirement Services Pty Ltd, confirms in her affidavit, sworn 1 April, 2010, that the facsimile number on the face of the letter is correct, but that she never received the letter. I accept the evidence of Mr Boyce that the letter was sent. [96] Whatever the attempts by the parties to sell the right to reside in the period immediately following the termination of the right to reside, it is apparent from the material that neither party attempted to update the resale value in accordance with section 67 of the RVA after September, 2006. In fact there does not seem to have been any communication between the parties from June, 2007 until November, 2008. [97] I consider that whether there is any prompt from a former resident or not the scheme operator has an obligation to attempt to agree with the former resident, every 3 months, on a new resale value and if there is no agreement to obtain a valuation. [98] The second respondent has not taken those steps, including when requested to do so by the applicant in November, 2008. [99] On this basis I find that there has been a failure by the second respondent to comply with section 67(2) of the RVA. The next issue is whether the applicant has been materially prejudiced by the failure. [100] Chesterman J in Chancellor Park Retirement Village Pty Ltd v Retirement Villages Tribunal & Ors [2003] QSC 276 said at paragraph 66 “The term “material prejudice” has no special meaning. Prejudice in this context means disadvantage. It is material if it is substantial or of much consequence.” The prejudice complained of by the applicant is expressed in this way in the affidavit of Lindsay Caplick, sworn, 25 February, 2010 “As the applicant, I have been materially prejudiced because I have been unable to sell the right to reside of Hazel Millicent Caplick and apply the funds from such sale in accordance with her will.” [101] The material prejudice must have been caused by the failure on the part of the second respondent to comply with section 67(2) of the RVA. [102] Agreement as to resale value is not a statutory precondition to sale or attempts at sale of the right to reside. Its purpose is to aid in the calculation of the exit entitlement, whatever the sale price, in accordance with section 66 RVA. The applicant is entitled under the RVA to sell the right to reside of his own volition as executor. The executor has not on the evidence been prevented from doing so by the action or inaction of the second respondent. [103] In considering the issue of whether the second respondent’s failure to comply with section 67(2) of the RVA has caused material prejudice to the applicant, one asks whether the prejudice would not have occurred “but for” the applicant’s failure.ii -- 20 of 22 -- 21 [104] I do not find that “but for” the failure of the applicant to agree an updated resale value, the right to reside would have been sold and the exit entitlement distributed. I am persuaded by the respondents’ submissions that any material prejudice suffered by the applicant is a result of the applicant’s own actions as the executor failed to take steps to sell the right to reside in the unit and failed to provide consent to allow the respondents to auction the right to reside. No explanation is given by the applicant as to why he did not agree to auction the right to reside when that proposal was put in March, 2007. He took no steps at that time to require compliance with section 67(2) or to proceed with an auction which may have resulted in a sale of the right to reside. Instead he waited until November, 2008 to address the question of the resale value. [105] I find that any material prejudice suffered by the applicant has not been caused by a failure on the part of the second respondent to comply with section 67(2) RVA. [106] On the basis of these findings I decline to order as part of any order I make that the second respondent pay to the applicant the exit entitlement as part of a process contemplated by section 171 of the RVA. However in accordance with section 191 of the RVA, I intend to make orders I consider just to resolve the retirement village issue before the Tribunal. The power under section 191 of the RVA is a general power in discharge of the Tribunal’s jurisdiction conferred by the Act to resolve a retirement village dispute. I find that a retirement village dispute exists on these facts. [107] The parties are agreed that a fresh valuation should be undertaken. The second respondent has submitted that it is prepared to pay all costs associated with the engagement of a valuer. The parties differ as to who should conduct the valuation. The applicant requires the valuation for the purpose of establishing the basis of the exit entitlement which it says should be ordered to be paid by the second respondent. The second respondent says that the new agreed resale value will be used to underpin fresh efforts to sell the right to reside, in which efforts it will assist. It also says that it is prepared to purchase Unit 13 for a fair market value. [108] In light of these submissions made by the parties, I order, pursuant to section 191 of the RVA, that: (a) within 14 days of the date of this Order, the second respondent at its cost, engage Taylor Byrne, Valuers, Hervey Bay, to conduct a valuation of the right to reside and immediately thereafter provide a copy of its instructions to the solicitors for the applicant. I do not think that after the lapse of almost 5 years since the last valuation, there is any particular advantage in Knight Frank conducting an updated valuation; (b) within a further 7 days, the applicant make any submissions to Taylor Byrne it considers relevant; (c) within 7 days of receipt of the valuation, the second respondent file and serve: -- 21 of 22 -- 22 (i) a copy or the valuation; and (ii) an estimate of the exit entitlement, together supporting documentation for the costs, charges and fees forming part of the calculation; and (d) the parties attend a compulsory conference in the Tribunal on a date allocated by the Tribunal after receipt of the material the subject of this Order. i [2009] CCT VH007-08, at paragraph 19. ii Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd (1968) 120 CLR 516. -- 22 of 22 --