Saunders v Paragon Property Investments Pty Ltd
[2008] QDC 322
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- Unreported Judgment
- Saunders v Paragon Property Investments Pty Ltd[2008] QDC 322
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Saunders v Paragon Property Investments Pty Ltd[2008] QDC 322
Saunders v Paragon Property Investments Pty Ltd[2008] QDC 322
DISTRICT COURT OF QUEENSLAND
CITATION: | Saunders v Paragon Property Investments Pty Ltd [2008] QDC 322 |
PARTIES: | JOAN ISOBEL SAUNDERS (Applicant) v PARAGON PROPERTY INVESTMENTS PTY LTD (Respondent) |
FILE NO/S: | 2930 of 2008 |
DIVISION: | Appellate |
PROCEEDING: | Appeal subject to leave from Commercial and Consumer Tribunal |
ORIGINATING COURT: | Brisbane |
DELIVERED ON: | 19 December 2008 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 21 November 2008 |
JUDGE: | Robin QC |
ORDER: | Appeal allowed, respondent to repay to applicant $9,900 of exit fee retained by it and a further $75.25 of “costs of sale” |
CATCHWORDS: | Retirement Villages Act 1999 s 15(2) – Property Law Act 1974 s 232(1) – exit fee for a retirement village resident “to be calculated as at the day (she) ceases to reside in the accommodation unit” – resident’s contract with operator stipulated 5% of sale price per year or part year of association with village – resident ceased to reside on second anniversary of the date of commencement of her contract – whether scheme operator entitled to retain an “exit fee” of 15% or whether the section required apportionment as at the “day” referred to – the resident’s Public Information Document (which prevailed over the contract) stipulated that the exit fee was calculated “from” the date of ownership commencing – whether that date excluded from the calculation – whether appeal should be amended to bring in this point. |
COUNSEL: | Rangiah SC for appellant Blaxland for respondent |
SOLICITORS: | David Wise for appellant Watson & Quinn Lawyers |
- [1]Before the court is an appeal subject to leave brought against a decision of the tribunal under s 100 of the Commercial & Consumer Tribunal Act 2003 on the ground of error of law in the interpretation and application of s 15(2) of the Retirement Villages Act 1999 (the Act). If the general importance of a matter plays any role in this court’s determining whether or not to grant leave, it points to leave being appropriate. It may be the same considerations that led the tribunal to sit three members, as also occurred in a subsequent determination which applied the one under appeal. Leave to appeal should be granted.
- [2]Section 15 of the Act (now changed) at relevant times was:
“15 What is an exit fee
- (1)An exit fee is the amount that a resident may be liable to pay to 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.
- (2)The exit fee for a residence contract, other than an existing residence contract, that a resident may be liable to pay to the scheme operator is to be calculated as at the day the resident ceases to reside in the accommodation unit to which the contract relates.”
- [3]Ms Saunders, the applicant in the Tribunal and applicant/appellant in this court contends that the exit fee she was liable to pay on ceasing to reside in her unit at Bellcarra Retirement Resort, Caloundra, on settlement of the sale of her right to reside there, was $19,800, whereas the respondent company, as operator of the Retirement Resort, retained from the proceeds of that sale and/or of the sale of the unit $29,700, which it contends represented the proper exit fee and also an amount of $752.50 representing its legal costs in relation to those sales, which Ms Saunders contends ought to be apportioned according to the shares of the sale price going to the parties.
- [4]It is convenient to adopt the statement of agreed facts which the parties handed to the Tribunal for the hearing on 20 August 2008:
“1. The applicant was the freehold owner of Unit 15 in the Bellcarra Retirement Resort (“Bellcarra”).
- Bellcarra is a retirement village located at Caree Street, Caloundra West in the State of Queensland.
- Bellcarra is registered as a retirement village under the Retirement Villages Act 1999 (Qld) with the Office of Fair Trading and was so registered on 4 June 2003.
- Units in Bellcarra are lots in a Community Titles Scheme governed by the Body Corporate and Community Management Act 1997 (Qld).
- A freehold interest in each unit is sold to residents by them subject to usual terms and conditions attaching to a lot in a Community Titles Scheme.
- The respondent developed Bellcarra and is the Scheme Operator of the village.
- The applicant entered into a contract with the respondent dated 12 August 2003 to purchase Unit 15 (“the purchase”).
- Prior to entering into the contract for the purchase of Unit 15 the respondent was given the Public Information Document under the Retirement Villages Act 1999 (Qld).
- The applicant was required to and did enter into a Service Agreement with the respondent dated 23 October 2003.
- The Service Agreement provides for inter alia the payment of an “exit fee” to the Scheme Operator, and includes a provision for the payment of costs of the Scheme Operator incurred in relation to a request for any consent by the Scheme Operator as provided for in the Service Agreement.
- The applicant began trying to sell her Unit in April 2005. No buyer was found until 14 August 2008, when the Unit was inspected by Ailsa Fay Cay (“Mrs Cay”). On 16 August 2008 instructions for the preparation of a contract for sale of the Unit to Mrs Cay were sent to the applicant’s solicitor by the relevant sales agent who acted in his own capacity as agent, but was also engaged separately as a consultant to the respondent in the capacity of Administration of the Village.
- The respondent’s consent was sought and given to the applicant’s sale of the Unit. That consent was conditional upon Mrs Cay signing on or before settlement a Service Agreement on similar terms to that signed by the applicant (to be prepared by the respondent). A PID for signing by Mrs Cay was provided to the applicant’s solicitor on 25 August 2005. It was signed by Mrs Cay on 20 September 2005.
- On 30 September 2008 Mrs Cay signed a contract to purchase Unit 15 from the applicant. On 4 October 2005 the applicant counter‑signed the contract. A Service Agreement for signing by Mrs Cay was provided to the applicant’s solicitor on 25 August 2005. The sale settled on 1 November 2005.
- Mrs Cay moved in on or after 1 November 2005.
- On or before settlement of the sale Mrs Cay signed a Service Agreement dated 1 November 2005 with the respondent. An exit fee in favour of the respondent began accruing on and from 1 November 2005 that would be payable by Mrs Cay on exit from the Village.
- An exit fee was payable by the applicant to the respondent on the sale of her Unit. The amount paid was 15% of the sale price. 15% x $198,000.00 = $29,700.00 including GST, referred to as a Deferred Management Fee in the respondent’s Tax Invoice No. 193 to the applicant.
- The quantum of the exit fee is in dispute.
- The applicant paid the respondent’s legal costs of $752.50 associated with the respondent providing consent to the sale.
- The quantum of the respondent’s legal costs are in dispute.
- The applicant wrote a letter to the respondent dated 26 February 2005 (bearing the wrong year – actually should be 2006). The applicant’s letter stated inter alia that she vacated the Unit on 23 October 2005.
- [5]Ms Saunders purchased the unit (No. 15) “off the plan” for $157,000. Her service agreement with the respondent contains the following definition in clause 1.1:
“Exit Fee” means an amount calculated in accordance with the following formula:
“Y x Purchase Price*
Where:
Y = if the duration of the period during which the Resident has owned the Premises (commencing on the settlement of the sale of the Premises to the Resident and ending on the date of settlement of the sale of the Premises by the Resident under the Sale Contract (inclusive) is:
- (a)up to and including one year – 5%;
- (b)more than one year and up to and including two years – 10%;
- (c)more than two years and up to and including three years – 15%;
- (d)more than three years up to and including four years – 20%;
- (e)more than four years up to and including five years – 25%;
- (f)more than five years – 30%.
*subject to Clause 9 of this Agreement.”
- [6]By clause 14 of that document, the Resident shall pay the Exit Fee to the Scheme Operator on or prior to the settlement of a contract under which the resident sells the “Premises”. The following clause gives the Scheme Operator a charge over “the Premises” to secure that entitlement and others, such as costs, general services charge and personal services charge, which may be supported by caveat. The service agreement is a “residence contract” for purposes of the Act. The above details are among those required to be included in it under s 45(1) which is followed by two important subsections:
“(2) A provision of a residence contract is of no effect to the extent that it is inconsistent with this Act or purports to restrict or exclude the operation of a provision of this Act.
- (3)Also, a provision of a residence contract is of no effect to the extent that it purports to restrict or exclude the operation of a public information document, or a provision of a public information document, taken to form part of the contract under section 37.”
- [7]The relevant Public Information Document (PID) informed Ms Saunders:
“Exit Fee
3.9 When you leave the accommodation unit, an exit fee may be payable to the scheme operator.
3.10 The exit fee for your accommodation unit is calculated as follows:
The exit fee will be calculated as a percentage of the Sale Price (see item 3.14 for definition of “Sale Price”) which you will receive for your unit on its sale. The percentage will depend on the duration of your stay in the Village (calculated from date on which you commence ownership of the unit to the date on which the sale of your unit by you settles). The percentages are calculated at the rate of 5% per year of occupancy or part of a year. The maximum exit fee payable is 30% of the Sale Price.
3.11 The minimum exit fee is 5% of the Sale Price.
The maximum exit fee is 30% of the Sale Price.
3.12 Examples of exit fee:
Calculated using an estimated Sale Price of $165,000.00
Year 1 | Year 2 | Year 5 | Year 10 |
$8,250.00 | $16,500.00 | $41,250.00 | $49,500.00 |
Exit Entitlement
3.13 When you leave the accommodation unit, you may receive an exit entitlement.
3.14 The exit entitlement for your accommodation unit is calculated as follows:
Sale Price less Exit Fee less Sale Costs
“Sale Price” is the amount for which you sell your unit (or, if the unit is sold for less than the amount agreed with the Scheme Operator as the price for which the unit is to be sold (“Exit Price”), the Exit Price).
“Exit Fee” is the exit fee calculated as set out in Clause 3.10.
“Sale Costs” means:
- (a)Costs in relation to the sale, including the cost of a valuation obtained in accordance with the Act or the Service Agreement.
- (b)Any General Services Charge or Personal Services Charge amounts outstanding at the date of payment of the exit entitlement.
- (c)Amounts payable for any work done necessary to reinstate the unit as nearly as practical to its condition at the start of the resident’s occupation.
- (d)The legal costs and disbursements incurred by the Scheme Operator in relation to the sale of the unit, as required to be paid by the Service Agreement.
3.15 Examples of exit entitlement: The following are examples only based on a Sale Price of $165,000.00 and varying Sale Costs and duration of residence. The exit entitlements will vary for different Sale Prices, Sale Costs, and periods of residence.
Example 1 – Duration of stay is one year
Assuming a Sale Price of $165,000.00 and Sale Costs payable by the resident of $2,500.00
The Exit Fee will be 5% of $165,000.00 = $8,250.00
Exit Entitlement = Sale Price – Exit Fee – Sale Costs
= $165,000.00 - $8,250.00 = $2,500.00
= $154,250.00
Example 2 – Duration of stay is two years
Assuming a Sale Price of $165,000.00 and Sale Costs payable by the resident of $2,750.00
The Exit Fee will be 10% of $165,000.00 = $16,500.00
Exit Entitlement = Sale Price – Exit Fee – Sale Costs
= $165,000.00 - $16,500.00 - $2,750.00
= $145,750.00
Example 3 – Duration of stay is five years
Assuming a Sale Price of $165,000.00 and Sale Costs payable by the resident of $3,000.00
The Exit Fee will be 25% of $165,000.00 = $41,250.00
Exit Entitlement = Sale Price – Exit Fee – Sale Costs
= $165,000.00 - $41,250.00 - $3,000.00
= $120,750.00
Example 4 – Duration of stay is five years
Assuming a Sale Price of $165,000.00 and Sale Costs payable by the resident of $3,200.00
The Exit Fee will be 25% of $165,000.00 = $49,500.00
Exit Entitlement = Sale Price – Exit Fee – Sale Costs
= $165,000.00 - $49,500.00 - $3,200.00
= $112,300.00
(Where the amount of the exit entitlement depends on the sale price obtained when the accommodation unit is sold, the scheme operator does not warrant that the sale prices used in the calculation examples will in fact be achieved at the time of sale.)”
- [8]By s 37(3) of the Act, if a contract provision disadvantages a resident compared with a PID provision, the latter prevails to the extent of the inconsistency. Further, by subsection (4), if a PID provision is inconsistent with the Act, the latter prevails to the extent of the inconsistency. The priority given to what the Act requires is clear.
- [9]Mr Rangiah SC, for Ms Saunders, submits there is inconsistency with section 15(2) in both the service agreement and PID provisions about the exit fee, the contention being that the section requires a calculation specific to the day it identifies, which will produce a different outcome from a calculation as at any other day. To calculate, according to the Oxford English Dictionary On-line is to estimate or determine by arithmetical or mathematical reckoning. While Mr Rangiah’s submission that the section requires “a calculation on a daily basis for partial years of occupation” rather than a calculation by reference to the year in which the resident ceases to reside seems more conformable to the idea of a fee being “calculated”, it cannot be gainsaid that a calculation also occurs by application of the 10% or 15% of the purchase price obtained by Ms Saunders, depending on whether the “calculation” relates to the first, second or third year of relevant connection with the Bellcarra Resort. As a matter of impression, I would be inclined to think that the drafter of s 15(2) envisaged the more complicated calculation, in other words, that Mr Rangiah is correct.
- [10]It is plain that in adopting a coarse, rather than a more refined scale, the parties here brought about a situation in which outcomes which might be considered anomalous could be anticipated. In any particular year, it would not matter, in the identification of the amount of the exit fee, whether Ms Saunders obtained services for one day or for 365 days. Subject to the argument regarding the significance of “from” dealt with below, Ms Saunders got the benefit of one day. The parties were correct to agree (Item 15) that for the 356 odd days remaining of the year from 23 October 2005 for which a full exit fee was paid by Ms Saunders, her purchaser Mrs Cay also had an exit fee “accruing on and from 1 November 2005” against her and in favour of the respondent.
- [11]In argument, there was considerable reference to the objects of the Act set out in Section 3:
“(a) to declare particular rights and obligations of residents and scheme operators;
- (b)to promote fair trading practices in operating retirement villages and in supplying services to residents;
- (c)to facilitate the disclosure of information to prospective residents of a retirement village to ensure the rights and obligations of the village residents and scheme operator may be easily understood;
- (d)to encourage the continued growth and viability of the retirement village industry in the State;
- (e)to encourage the adoption of best practice standards by the retirement village industry;
- (f)to provide a clear regulatory framework to ensure certainty for the retirement village industry in planning for future expansion;
- (g)to facilitate participation by residents, who want to be involved, in the affairs of retirement villages;
- (h)to provide for processes for resolving disputes between residents and scheme operators.”
- [12]It was common ground that those “objects” are indistinguishable from the “purposes” which the court is required to take into account in interpreting s 15(2) of the Act by s 14A of the Acts Interpretation Act 1954. The effect of s 14A has been elucidated in a number of decisions Mr Rangiah cited where counterparts in other jurisdictions less broadly expressed were considered: Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249, 262, Mills v Meeking (1990) 169 CLR 214, 235 (“the approach required…leaves no ambiguity or inconsistency; it allows a court to consider the purposes an Act in determining whether there is more than one possible construction.”), Newcastle City Council v GIO General Ltd (1997) 191 CLR 85, 113, Kelly v R (2004) 205 ALR 274, 300-301. McHugh J features prominently in those decisions, even in support of adoption of a “strained construction” in order to achieve statutory objects. Before the tribunal, Mr Wise (Ms Saunders’ solicitor) relied on (b) and (by alluding to “best practices” – see paragraph 16 of the Tribunal’s reasons) to (e), about the second of which the Tribunal said nothing. In their reasons; they twice set out (d) after noting Mr Wise’s submissions about asserted “double dipping” and the incentive and opportunity a scheme operator may have to force a departing resident into the next year for purposes of exit fee calculation, then went on:
“19 Often the entire resale process is actually facilitated and controlled by the scheme operator itself, or by an in‑house agent associated with the scheme operator as was the case here. If the sale is near the cusp of an annual increment, an unscrupulous operator, perhaps under pressure from shareholders or financiers to increase returns, could “drag its feet” and effectively delay settlement until the cusp. The applicant however does not allege that this happened in the present case.
20 Mr Blaxland submitted on behalf of the respondent that the draftsman could easily have used the words “pro‑rata” but has not done so. Those words are very well known and widely accepted, used by not only the legal profession but the community at large. The use of the words in section 15(2) “… as at the day …” mean no more than a point in time in a particular year and do not mean as at the day in question on a pro‑rata basis.
21 Mr Blaxland argued that the Act leaves such matters as pro‑rata proportioning or otherwise to the contracting parties, and in this case the Service Agreement states clearly that there is no such proportioning on a daily basis.
22 Mr Blaxland rejected the applicant’s argument that his argument involves no “calculation”. The calculation may be a little more simple or straightforward than with a pro‑rata calculation on a daily basis but it is a calculation nonetheless.
23 Mr Blaxland submitted that the operator must be allowed some fairness as well as the resident, and section 3(1)(b) of the objects of the Act stipulates that it is an object of the Act “to encourage the continued growth and viability of the retirement village industry in this state”.
Findings – Exit Fee
24 An exit fee provision in the form of a deferred management fee benefits residents by allowing them to defer having to pay management fees from their income on a periodic basis during their residence in the village. Residents are able to defer payment of management fees until they have some funds upon settlement of the sale of their home to a new purchaser. However, we do not consider that section 15(2) is a remedial or beneficial provision; it benefits neither a resident, nor a scheme operator. It merely regulates the process of calculating an exit fee if the parties have agreed to have management fees deferred.
25 We do not agree with the applicant that her interpretation of the provision best achieves the objects of the Act. Section 3(1)(b) as it stood in 2005 stipulated that it is an object of the Act “to promote fair trading practices in operating retirement villages and in supplying services to residents”, but section 3(1)(d) stipulated that another object of the Act is to “encourage the continued growth and viability of the retirement village industry in the State”.
26 The respondent is entitled to make a profit and the viability of its village depends to a large extent on being able to make a profit from exit fees. It is a case of swings and roundabouts for the respondent. The profit gained from an exit fee will be less when a resident ceases to reside in the village towards the end of a calendar year, but greater in a case such as the present where a resident ceases to reside a matter of a few days or weeks into a new calendar year.
27 Clause 1.1 in the Service Agreement is not unfair to the applicant in our view when the benefit to the applicant of the deferred management fee arrangement is considered, although its application in her particular circumstances has a harsh effect. It is relevant that the applicant was legally represented when she purchased her unit and she agreed to the formula for the calculation of exit fees contained in clause 1.1 of her Service Agreement. The arrangement does not unfairly favour the respondent when the swings and roundabouts of payment of exit fees are considered.
28 Mr Wise’s interpretation involves “reading in” the words “on a daily pro rata basis” to the actual words in section 15(2), which without the addition of those words are capable of bearing a different meaning. In discussing the purposive approach to statutory interpretation, McHugh JA (as he then was) in New South Wales of Appeal decision in Bermingham v Corrective Services Commission of NSW identified three conditions in which the “reading in” of missing words could be a legitimate use of the purposive approach, namely:
“First, the court must know the mischief with which the Act was dealing. Secondly, the court must be satisfied that by inadvertence Parliament has overlooked an eventuality which must be dealt with if the purpose of the Act is to be achieved. Thirdly, the court must be able to state with certainty what words Parliament would have used to overcome the omission if its attention had been drawn to the defect.”
29 We do not consider that those conditions are satisfied here. The calculation of deferred management fees on a yearly basis is not an obvious mischief; the beneficial purpose of the Act is not defeated if it is left open to the contracting parties to decide the manner of calculating deferred management fees; and it is impossible to say with certainty that the words which Parliament omitted are “on a daily pro rata basis” rather than, for example, on a pro rata weekly or monthly basis.
30 The Tribunal has reached the conclusion that there is nothing in the words of section 15(2) which prohibits parties from agreeing to define the exit fee as the parties have done in clause 1.1 of the Service Agreement. On the other hand, there is nothing in the provision which prohibits parties from agreeing to calculate exit fees on a pro‑rata basis. The provision simply does not prescribe the method by which exit fees are to be calculated, Parliament has prescribed only a point in time when the exit fee is to be calculated but has not prescribed how the calculation is to be made.
31 We have reached the conclusion that the exit fee the applicant was liable to pay was the 15 per cent charged, and the amount so calculated is the same whether she “ceased to reside” in the village in terms of section 15(2) on 23 October or on 1 November.”
- [13]It is difficult to understand how an entirely foreseeable outcome acknowledged to be “harsh” to Ms Saunders can be seen as “not unfair” in this context. I am not sure what is the warrant for treating the exit fee as a deferred management fee, although Item 16 of the agreed facts notes that the respondent so characterised the exit fee in a tax invoice directed to the applicant. One would not expect a management fee to be levied on the basis of tranches of a full year, so that a resident liable for a year and a day in Bellcarra would pay twice as much as a resident for a year.
- [14]In this court, Mr Blaxland, for the respondent, justified the exit fee arrangements on the basis of a reward to a scheme operator whose performance enhances its village’s reputation so that new residents buying in will be prepared to pay more. Here, any component of the exit fee referable to that would be relatively tiny. Even if the departing resident suffered a loss of mammoth proportions on her original investment, the scheme operator will still obtain its 5%, 10% or other percentage of the sale price. I am unable to agree with the notion of this respondent’s exit fee arrangements being “a case of swings and roundabouts” for it. That expression suggests to me that there will be occasions on which the respondent does well, occasions on which it does badly. There will be no occasions on which it does badly if the Tribunal’s construction of s 15(2) is correct, only cases where it does more or less well. Looking at it from the other side, I think it is impossible to regard the resident as advantaged if Ms Saunders’ construction is adopted and she is liable to pay an exit fee on what has been called a “pro-rata” basis. I cannot imagine that the legislature regarded “the continued growth and viability” of the industry as depending on operators obtaining windfalls; I cannot imagine any prudent operator designing a project whose profitability or viability depended upon windfalls. Is it seriously suggested that Bellcarra or any other village might cease to be viable if all of their residents managed to extricate themselves before being trapped in a new accounting year? On the reasonable assumption that fee levels are set prudently, I don’t think there would be any threat to viability following from calculation of exit fees from day to day. I accept that a scheme operator may be at risk of suffering the odd hiatus in exit fees accruing (as here between 23 October 2005 and 1 November 2005 when Mrs Cay came in) when there may be no resident liable unless some protection is bargained for.
- [15]I agree with Mr Rangiah’s questioning of the tribunal’s determination in paragraph 27 that it was relevant to determining the fairness issue that his client was legally represented.
- [16]In my opinion the Tribunal was pursuing a false issue in speculating what words, if any, the legislature had omitted from s 15(2). As I understand the argument for Ms Saunders, it was that the provision had the same meaning as it would have if things had been made doubly clear by the insertion of some expression such as “on a pro rata daily basis.” With or without this insertion, this meaning is the same, in my opinion.
- [17]The common law did not favour apportionment, which led to outcomes considered unsatisfactory where events interfered with the orderly unfolding of arrangements whereby obligations or entitlements such as rent became due after or in respect of a fixed period, such as a year. The legislature intervened in the 19th century. The Queensland provision is now s 232(1) of the Property Law Act 1974 which commences:
“(1) All rents, annuities, dividends, and other periodical payments in the nature of income whether reserved or made payable under an instrument in writing or otherwise shall, like interest on money lent be considered as accruing from day to day, and shall be apportionable in respect of time accordingly.”
- [18]Given the nature of exit fees under the Act, I am inclined to think this provision would apply. The Property Law Act quotes exceptions of its own in s 233 for annual sums payable under policies of assurance, likewise, “any case in which it is expressly stipulated that apportionment shall not take place.” The respondent here has not stipulated to that effect in express terms. There is certainly no universal favouring of apportionment, so that land tax, for example, is borne by whoever happens to be the owner on June 30 in any year. In conveyancing, whether outgoings are apportionable or not is potentially of great concern, and productive of conflicting views. See Voumard, The Sale of Land (4th) 314ff. I venture to suggest that, in contemporary conditions, fairness is regarded as promoted by apportionment and take this opportunity to set out the principal passages from Holdsworth: History of English Law (268ff), referred to by the Queensland Law Reform Commission in support of the adoption of s 232 in QLRC 16:
“… as the rent was not due till the end of the appointment period, it followed that , if the lease determined before the time for payment, “no rent shall be paid, for there shall never be an apportionment in respect of part of the time.” Thus, if tenant for life leased for a term, and the rent was payable at Easter, and the lessor died in the last quarter before Easter, the representatives of the lessor could not recover rent for the preceding three quarters, because no rent was due till Easter, and no apportionment was allowed. In equity, however, the remainderman was allowed in such a case to recover a fair remuneration for the use and occupation of the property between the death and the next quarter day. This inconvenient rule, that no apportionment was allowed, was applied in the Middle Ages to those pensions and annuities which partook of the nature of rents; and it was partly for this reason that it was extended to all periodical payments. In so far as this was the reason for the extension of the rule to all periodical payments, it is clear that the lawyers had lost sight of its original basis. But this was not the sole reason for its extension. Its extension was due in great part to the idea, which appears in the Year Books, that if a man had put himself by a single contract under a single obligation to do a series of acts, there could be no obligation to pay till all the acts had been done; so that if the contract ended without the default of the parties to it, before the acts were done, no payment was due. In other words, this rule could be justified, not only on the old idea which regarded the rent as the thing issuing from the land, but on the newer idea which regarded the obligation to pay rent as depending on a contractual obligation. And this newer idea made for a stricter enforcement of the rule than the older idea. Indeed the rules as to rent were, from this point of view, contrasted with the rule as to money due under a contract. “If,” says Coke, “I am bound to you by a bond of £20 to be paid at four usual feasts of the year by equal portions, the oblige shall not have an action of debt before all the terms incurred; the same law of a contract: but if a rent is reserved on a lease for years at four usual feasts of the year, the lessor shall have an action of debt after the first day, and shall not stay till the whole is due, because it is accounted in law as a reservation of parcel of the issues and profits of the land, which is no debt before the day, as in the said case of a bond or contract.” We shall see that this idea, that the unity of an obligation or a condition prevented apportionment, had something to do with the manner in which the courts in Dumpor’s Case, interpreted any attempted waiver of a condition in a lease.
But it soon became clear that the rule that there could be no apportionment of rent, even though it was less rigid than the rules applied to the apportionment of money due under a contract, would work gross injustice unless it was modified. Coke could cite mediæval authority for divers modifications in various cases which had come before the courts in the Middle Ages. He approved of and restated these modifications in his commentary on Littleton. They therefore became part of our modern law. Thus if the reversion was severed, or the lessee surrendered part of the premises to the lessor, or the lessor entered lawfully on part of the land, or the lessee was evicted from part of the land by title paramount, the rent was apportioned. If however the lessee was evicted from the whole of the property by a person claiming by title paramount, or from the whole or part of the property by the fault of the lessor, or if an adverse possessor was in occupation of part of the property, so that the lessee could not get possession of the whole property leased, the old rule prevailed – the rent was not apportioned, and the lessor could not distrain for any part of the rent reserved. We can see a good illustration of the application of this rule, and of the principle upon which it was originally based, in the decision that if a rent be reserved for land and chattels, and the lessee is wrongfully evicted from the land, the rent cannot be demanded for the chattels, because it issues from the land.
The admission of these modifications made the rules on this subject complicated; and even with these modifications the rule worked considerable injustice, not only in respect to rent, but also in respect to other periodic payments. The Legislature made several half hearted attempts to modify its results, without much effect. At length in 1870 it adopted the right principle. It swept away the common law rule against apportionment, by enacting that rents and other periodical payments should accrue due from day to day, and should be apportioned in respect of time accordingly.” (footnotes omitted)
- [19]Here, the question is whether s 15(2) of the Act requires apportionment. The applicant’s case concedes that one interpretation open (the one the tribunal favoured) is that apportionment as at the appropriate day is not required. In my opinion, the alternative approach, that this is a provision requiring apportionment, is also open, indeed, is the more natural one. That aside, in my opinion, it is the interpretation which reference to the objects in s 3 requires be adopted.
- [20]There may well arise situations in which uncertainty clouds the issue of the day on which a resident ceases to reside in her accommodation unit. Plainly, some formality about identifying the day is required, to offer the scheme operator reasonable protection against a resident who has absented herself (whether or not by choice) from retrospectively asserting that residence in her unit had ceased; there must be something to show at the time when physical residence ceases that this is going or is intended to be permanent. There are no difficulties of that kind here; Ms Saunders did not impress the Tribunal by assertions made that she had ceased to reside in her unit on 22 October 2005. The parties are in the position of having agreed that residence ceased the day following. The court should act on that, rather than speculate that the true date was, say, 1 November 2005, when Mrs Cay took over.
- [21]These aspects assume importance because of an application to this court to amend the appeal document to add a new point to the effect that 23 October 2005 was the last day of (but within) Ms Saunders’ second year. So far as the parties’ documents are concerned, the PID takes precedence over the contract. It describes the exit fee as calculated “from” the date of commencement of ownership of the unit. (It counts for nothing that the cut-off day is identified as that of settlement of the sale of the unit, given that the Act prevails to make the pertinent day the one when residence ceases.)
- [22]There is much case law considering whether the date “from” which something is reckoned is included in counting a period of time. In some contexts, legislation helps, for example in respect of limitation of actions where, by statute, the date on which the cause of action arises is usually excluded. So far as case law is concerned, the decisions go both ways. A typical 19th century decision is digested in Butterworths’ Words and Phrases Legally Defined (2nd):
“The first question raised is whether or not November 24, 1888, the day on which this event occurred, is included in the period covered by the policy. The insurance being ‘for twelve calendar months from November 24, 1887’, obviously either November 24, 1887 or November 24, 1888 must be excluded, for otherwise the period covered would exceed twelve calendar months by one day. I decide…that the former date is excluded and the latter included…I cannot but think that, as regards time, ‘from’ is akin to ‘after’, and excludes the date fixed for the commencement of the computation.” South Staffordshire Tramways & Co v Sickness & Accident Assurance Assocn., [1891] I Q. B. 402, per Day, J., at pp 404, 405.”
cf the earlier entry for Wilkinson v Gaston (1846) 9 QB 137, per Williams J at 146.
- [23]In Australia, as it happens, there are helpful statements of high authority. In Associated Beauty Aids Pty Ltd v Federal Commissioner of Taxation (1965) 113 CLR at 668, Barwick CJ said:
“There is no general rule as to the consequences of the use of the preposition “from”, whether it be in the computation of the period of time, or in any other connexion. In general, in computing a period of time from a date, the period will commence at the end of the day of that date, but there is no universally operating rule to that effect, see, for example, the illustration given in the note of page 1068 of the report of R v Stevens and Agnew (1), and Wilkinson v Gaston (2). When, as here, a change is to take place from a stated time, the general “rule” as to the computation of a period of time is not of direct significance, though it is illustrative of the separating effect of the preposition “from”. In my opinion, it does not usually have an inclusive but rather an exclusive or separatist quality. But unquestionably it may have either. Thus, the preposition derives its relevant quality from the context in which it is found, which includes the purpose which the document in which it is found is evidently designed to effect.
…
In this case, it seems to me impossible to construe the article so that a notice of election should be operative before the actual time it was given. The impractical consequences of such a construction are quite obvious and of a kind not to be contemplated in the business affairs of a company. Thus the paragraph of the article ought not to be read as providing for an operation of a notice of election at the earliest moment of the day on which it is left at the Company’s office.
There are also great practical difficulties if the paragraph is construed as giving an operation to the notice of election from the moment of the day on which it is left at the Company’s office.
There are also great practical difficulties if the paragraph is construed as giving an operation to the notice of election from the moment of its delivery. This time in the ordinary course would be difficult to establish with certainty. Also, the possibility of a notice being given during a general meeting would produce somewhat strange consequences. If it had been intended to make the notice operative at the moment of its delivery, it would have been sufficient to have said “whereupon such shares shall become, etc.”. Though not of course by any means conclusive, it is significant that the clause does to some extent contrast the time of delivery with the time of operation by adding after “whereupon”, the words “from the date of delivery etc”.
In my opinion, the only practical construction of the paragraph is to give the preposition ‘from” its separatist quality and treat it as dividing off the time for the change in the quality of the shares from the day of the delivery of the notice of election. The notice of election, in my opinion, operates from the end of the day of the date on which it is left with the Company at its office.”
- [24]At 669 Windeyer J said:
“I prefer not to express any view of what, in general, is the effect of saying that a consequence of doing some act in the law is to operate “from” the day on which it is done. I incline to the view that, if nothing to the contrary appears, what is meant is that the result of the act is operative from the first moment of the day on which the act is done – not because the act has a retroactive effect, but because it takes effect instanter, and when a day is spoken of the law does not take cognisance of parts of a day. But in this case it seems to me that the context and circumstances show that what was meant is that the consequences of the delivery of the notice should commence from the last moment of the day of the date of delivery, which is the same as saying from the first moment of the day following: Prowse v McIntyre (1). I therefore agree that both questions be answered in the negative.”
- [25]Owen J said at 671:
“The words ‘from the date of’ may mean ‘on and from the date of’, which would include the day of delivery of the notice, or they may mean ‘immediately after the day’ of delivery, thus excluding the day of delivery as is usually the case where a period is fixed ‘from’ a particular day for the doing of some act. This, however, is not such a case. On the whole I think the article should be read as meaning that the conversion is to become effective on the first moment of the day following that on which the notice in writing is left at the Company’s office. The general rule is that the law disregards fractions of a day. For that reason, and also because the words are ‘from the date of delivery’ and not ‘from the delivery of’, I do not accept the suggested interpretation by which the conversion would take effect at the moment when the notice was left at the Company’s office. To adopt the view that it was intended that the conversion should become effective as from the first instant of the day when the notice is left at the Company’s office could produce some difficult problems in cases, such as the hypothetical one which it is necessary to consider here, in which the Company’s general meeting is held on the same day as that of which notice is left at the Company’s office. If, for example, the general meeting took place in the morning of that day and at it the shareholders exercised the voting rights conferred by the shares then held by them and later in the day the notice was left at the Company’s office, what would be the effect on resolutions passed at the meeting which had already been held? These considerations point, I think, to the conclusion that the intention was that the conversion should take effect not on the day of delivery of the notice but ‘from’ in the sense of ‘immediately after the conclusion of’ the day of delivery.”
- [26]Nice questions might arise had the respondent sought to deny Ms Saunders access to the unit or benefits under the parties’ agreements on 22 October 2003. On the view emerging from these cases, the respondent could have done that. One can be fairly confident that, as a matter of goodwill, it would never have contemplated doing so.
- [27]More recently, in the High Court in Forster v Jododex Australia Pty Ltd (1972) 127 CLR at 440, Gibbs J said:
“The exploration license was granted ‘for the term of twelve months from the date hereof’, that is, from 28th November 1968. The question is whether the term commenced at the beginning, or at the end, of that day. Where a written instrument requires a period of time to be computed ‘from’ a specified date, it depends on the true construction of the instrument whether the date specific is to be included in the period. Generally speaking, however, the day from which the period runs is excluded, although there is no rigid rule to that effect, and ‘from’ is capable of having an inclusive effect in an appropriate context. These propositions seem to me established by the authorities: see in Australia, Associated Beauty Aids Pty Ltd v Federal Commissioner of Taxation (1), and in England, South Staffordshire Tramways Co v Sickness and Accident Assurance Association (1); Goldsmiths’ Co v West Metropolitan Railway (2); Stewart v Chapman (3); Cartwright v MacCormack (4); and Trow v Ind Coope (West Midlands) Ltd (5). In particular, where the term of a lease is expressed to commence ‘from’ a specified day, the term will, prima facie, commence at midnight on the day specified, and will last during the whole anniversary of the day from which it began, unless a different intention is revealed in the document: Ackland v Lutley (6); Kemp v Palmer (7); Meggeson v Groves (8); Ladyman v Wirral Estates Ltd (9); cf Sidebotham v Holland (10); Ex parte Le Tonge (11); and W.H. Brakespear & Sons Ltd v Barton (12).”
- [28]Mason J said at 450:
“I approach the question relating to the validity of the renewals on the footing that the exploration license which was granted for the term of twelve months ‘from the date hereof’, the date of execution by the Minister being 28th November 1968, commenced at the end of that day. The alternative construction offered by the appellant was that ‘from’ should be read as signifying from the commencement of that day. In rejecting the appellant’s construction I should prefer to say that when the character and provisions of the licence are examined, no reason emerges for thinking that the word ‘from’ should not be given the exclusive quality which it usually possesses, in particular where an interest for a term is created as in the case of leases. Gibbs J has pointed out that the matters relied upon by the appellant do not provide support for the construction which is urged on his behalf. Indeed, in my opinion the obligation cast upon the licensee by cl 2 to ‘immediately commence…such surveys and other operations…’ would have come into operation at the earliest moment of the day, before the license was actually signed by the Minister, if the appellant’s argument were correct. The provision therefore confirms the view that ‘from’ is used in its usual sense.”
- [29]If the appeal is amended to allow this point in, it must succeed, because Ms Saunders never got into her third year. In my opinion, that is the correct analysis.
- [30]It is open to the court, in my opinion, to allow the appeal to be expanded in this way. In Banque Commerciale (in liquidation) v Akhil Holdings Limited (1990) 169 CLR 279, Mason CJ and Gaudron J at 284 referred to the rule that:
“Unless all facts have been determined beyond controversy or the question is one of construction or law and it is expedient in the interest of justice to entertain the point, the party may not take a point first time on appeal.”
- [31]Mr Blaxsland protested that it might have been possible for his client to call evidence on the point and that other facts might have come out before the Tribunal had it been known that the “new” point was to be taken there. He was allowed to state from the bar table that one respect in which matters were more complicated was that on 23 October 2005 Ms Saunders moved into accommodation made available to her by the village manager. That would appear to me to bespeak a general concern then that she be spared the loss of $9,900 of the sale price realised by her. That is by-the-by. In my opinion, it was always on the cards that in the Tribunal this point would have emerged. I do not think the respondent could have done anything about it and find that the “test” in Banque Commerciale is easily satisfied here. The amendment to the Notice of Appeal subject to leave should be allowed. It is only necessary to turn to this new point if my conclusion regarding the proper construction of s 15(2) of the Act is in error.
- [32]Should occasion arise for applying s 15(2) as of a day which is not an anniversary, the apportionment which I think the provision requires is easily calculable by taking one 365th (one 366th in a leap year) of the sale price as the daily accretion to the scheme operator’s entitlement. Here it is that fraction of 5% of the price. It would be something like $27.12 for the first day.
- [33]There is another aspect of the appeal to be dealt with concerning the respondent’s retention of $752.50 in legal costs referred to in paragraph [3] above. The sum apparently represents the full amount of the respondent’s relevant costs, which Ms Saunders contends should have been shared by reason of s 68(1) of the Act. This is an important point, which may appear complex, depending on the extent of recourse to technicality in construing “sale proceeds of the right to reside” in the section. It is convenient to set out in full Mr Rangiah’s argument, which, in the end, I agree with, being of the view, essentially, that the quoted expression refers to what a resident gets in when she sells out of the retirement village:
“49. This provision, as it stood at the relevant time, provided:
’68 Costs of selling
- (1)The costs of the sale of a right to reside in a particular accommodation unit, including the costs mentioned in sections 60(2) and 67(3), are to be shared by the former resident and the scheme operator in the same proportion as they are to share the sale proceeds of the right to reside in the unit on its sale.’
- The applicant submitted before the Tribunal the respondent’s legal costs associated with the transfer of the unit from the applicant to the new owner were a ‘cost of sale’ to be shared between the applicant and the respondent in accordance with this provision.
- However, the Tribunal found that s 68(1) had no application to the present case, saying:
“34 Section 68(1) provides for the sharing proportionally as between a former resident and a scheme operator of the costs of selling the former resident’s right to reside in the village. However, the applicant’s residence contract does not provide for sale of the right to reside in the unit. Pursuant to clause 3.14 of the PID, the applicant is to receive the full amount of the ‘sale price’ as defined, less ‘exit fee’ and ‘sale costs’. The ‘sale price’ is defined as the amount for which the applicant sells her freehold interest in her unit. The purchaser of the unit does not pay an additional amount to acquire a right to reside, that is, the purchaser does not pay a money price to the respondent for the right to reside. The purchaser acquires the right to reside in the village in consideration of entering into the Service Agreement and agreeing thereby to pay the exit fee and other charges, and in consideration of entering into the sale contract with the applicant in respect of the freehold interest in the applicant’s unit.
35 In those circumstances, section 68(1) has no application to the present circumstances.”
- This finding is based on:
- (a)a misconstruction of the applicant’s residence contract; and
- (b)an incorrect assumption that a resident’s ‘right to reside’ under the RVA is separate and distinct right from their freehold interest in their unit.
- It is clear from the applicant’s residence contract that the Tribunal wrongly identified the consideration paid by an incoming resident in order to obtain their ‘right to reside’, and has wrongly assumed that the consideration must be paid to the scheme operator.
- Under the RVA, the consideration for a right to reside is a payment known as an ‘ingoing contribution’. Section 14 and s 7(b) of the RVA defines ‘ingoing contribution’ as follows:
‘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’ (underlining added)
- In the present case, the PID provided by the respondent to prospective residents describes the sale price of the freehold interest as the ‘ingoing contribution’. For instance in the applicant’s PID, clause 3.4 states that ‘the ingoing contribution for the accommodation unit is $157,000’. The PID forms part of the residence contract between the ingoing resident and the operator (s 37), and so the ingoing contribution is paid by the incoming resident ‘under the residence contract’ for the purposes of s 14, even though it is not paid to the operator but to the outgoing resident. (Importantly, there is no requirement in s 14 that the ingoing contribution be paid to the scheme operator.)
- In this village, the ‘ingoing contribution’ is consideration for the freehold interest, and so the freehold interest must be a component of the ‘right to reside’, by virtue of s 14.
- The other consideration passing from an incoming resident is entry into the Service Agreement, under which the incoming resident must:
- (a)grant the operator an option to purchase the freehold (clause 7.1);
- (b)charge the freehold in favour of the operator (clause 15.1);
- (c)deposit the certificate of title with the operator (clause 15.2(c))
- (d)consent to a caveat in favour of the operator (clause 15.2(a)); and
- (e)agree to restrictions on their ability to dispose of the freehold (clause 10).
- In return for the incoming resident agreeing to enter that Agreement, the operator consents to the transfer of the freehold. This consent is the other component of a right to reside in a freehold village.
- Therefore, in a freehold village the ‘right to reside’ is a combination of:
- (a)a freehold interest in the unit; and
- (b)the operator’s consent to occupy the unit.
- Each of these components is necessary to create a ‘right to reside’ in a freehold village, but neither would be sufficient on its own.
- The Tribunal’s treatment of a ‘right to reside’ as being separate and distinct from the freehold interest is also at odds with the scheme of the RVA.
- The RVA contemplates various forms of tenure in retirement villages, including freehold, leasehold or licence: see s 61, s 62, s 90(2), s 114, s 123(2) and mandatory clause 1.1.1 of the PID. Because of the need to accommodate various types of tenure, the RVA obviously needs, where possible, to use terminology that is not tenure specific. For instance, the capital amount paid by a resident in order to acquire a right to reside in a village is not referred to as the ‘purchase price’. It is instead referred to as the ‘ingoing contribution’.
- the expression ‘right to reside’ was intended to be the tenure-neutral term adopted by Parliament to describe a resident’s interest in their accommodation unit. It is used approximately 80 times throughout the RVA and is a term of fundamental importance to the scheme of the Act. It is central to the tenure-neutral definition of ‘retirement village scheme’ in s 7 of the Act.
- In a village offering leasehold tenure, the ‘right to reside’ would be constituted by the lease over the unit that is secured by registration on the title (see the definition of ‘leasehold interest’ in the Dictionary to the RVA). In a licence tenure village it would be the licence to occupy a unit, which is secured by the statutory charge over the land in Part 6 of the RVA (which does not apply in leasehold or freehold villages: s 114).
- In a freehold village the ‘right to reside’ is a combination of the freehold interest and the operator’s consent to occupy. If the ‘right to reside’ were merely the operator’s consent (as suggested by the Tribunal), the provisions in the RVA dealing with ‘selling’ a right to reside (Division 4 of Part 3) would not make sense in a freehold context. (Conversely, if the ‘right to reside’ were intended to just be the freehold interest, the provisions in the Act which deal with ‘termination’ a right to reside (Division 4 of Part 3) would not make sense in a freehold context.)
- In a number of instances, the RVA’s use of the term ‘right to reside’ is in a manner that contemplates a freehold interest. For instance, ss 15(1)(b) and 16(b) refer to ‘settlement of the sale of the right to reside in the accommodation unit’. Section 45(i) refers to ‘the resident’s right to resell the right to reside in the accommodation unit’. The definition of ‘sold’ in the Dictionary Schedule to the Act provides that ‘sold, for a right to reside in an accommodation unit, means when a contract for the sale of the right is settled’.
- Division 5 of Part 3 of the RVA is entitled ‘Reselling the resident’s right to reside’. Parliament intended that Divisions to apply to freehold villages (see s 61). However, if the Tribunal is correct in treating the right to reside as something separate and distinct from the freehold interest that is sold to an incoming resident, then it would make a nonsense of the heading to this Division. (The heading is part of the Act and must be taken into account for the purposes of statutory interpretation: s 14(1) of the Acts Interpretation Act 1954.) It would also make a nonsense of a number of provisions in this Division. For instance, s 60 refers to the ‘resale value of the right to reside in the accommodation unit’. Section 64(2) reads: ‘the former resident may engage a real estate agent to effect the sale of the right to reside in the accommodation unit.’ These provisions only make sense in a freehold context if the reference to a ‘right to reside’ is taken to mean, not just the consent of the operator to occupy the unit (which cannot sensibly be valued or sold by a real estate agent), but also the freehold interest in the unit.
- If the term ‘right to reside’ referred only to the consent to occupy from the operator, and did not include the freehold interest, it would also create unlikely results under other provisions. For instance, when a resident leaves a village (for instance to enter an aged care facility), the Act allows an operator to continue to charge that resident the ongoing service fees ‘until the right to reside is sold’ (s 104). If the Tribunal was correct, then the ‘right to reside’ is not sold in a freehold context, and so the obligation to pay the service charges may never end.
- Section 68 falls within Division 5, which, as already noted, was intended to apply to freehold villages given the existence of s 61 in that Division. The reference to the sale of a right to reside in s 68(1) was intended to include the sale of a freehold interest, and that provision requires the costs of that sale to be shared by the former resident and the scheme operator in the same proportion as they are to share the sale proceeds of the right to reside in the unit on its sale. The sale proceeds are shared in the freehold context, as the outgoing resident receives the sale price less the exit fees, and the operator receives the exit fees.
- A sale of a freehold interest in a village cannot be completed without the operator’s consent, and so the cost of obtaining that consent is a ‘cost of sale’ falls to be shared in accordance with that provision.”
- [34]Mr Blaxland treated the foregoing as a pleading in his answering Outline of Argument. The response to the s 68 issue depended heavily on the response to Mr Rangiah’s contention that s 15(2) requires that the exit fee be calculated as of the date a resident ceases to reside in the accommodation unit to which the contract relates, rather than on the date the sale settles:
“47. Not Agreed. This is the very point that the Tribunal was deflected from deciding by the Appellant’s conduct of her case. The argument put by the Respondent and which was not decided upon by the Tribunal was as follows:-
The Appellant relies on Section 15 (1)(a) RVA, it would appear, to argue that the relevant calculation is to be made on the day she stopped living in the Unit by interpreting the words “…the resident ceases to reside in…” to mean that ‘live in’ and ‘reside in’ are synonymous. Respectfully, such an interpretation is incorrect.
The correct approach, it is respectfully submitted, is as follows:-
(i) Section 9 RVA gives a specific meaning to who is a resident. Such a person is one who has “…a right to reside…”. Actually living in the Unit is not relevant to the meaning in this case; it is the right to do so. Without conceding it to be so, were it not for the definition in Section 9 RVA the Appellant may have been able to argue that a person can only live/reside in one place or another and if she was living/residing somewhere else other than at the Unit then she could not be living/residing in the Unit.
Section 9 RVA also refers to the entitlement of the Resident to receive services.
(ii) Therefore, Section 15(1)(a) RVA must be interpreted to mean ‘The day a person having a right to reside in the accommodation ceases to have a right to reside in the accommodation…’. The legislation could have used the word ‘vacate’ to denote a resident ceasing to live in a Unit but it did not do so. Being a ‘Resident’ and ‘reside in’ have a special meaning pursuant to the provisions of the Act.
One can envisage a situation in which a person purchases a Unit in a Village, has a stroke before they move in, go into a coma, become resident in a hospital and pass away 6 months later in the hospital without ever moving in to the Unit. Is it to be seriously suggested that such a person would not be liable to pay any ‘exit fee’ because that is the effect of the Appellants argument as it stands?
A much worse mischief, whether one has a pro rata payment as submitted by the Appellant or a yearly payment as submitted by the Respondent, would be where a resident decided to sell a Unit. The resident may then take the view that the Unit could take some time to sell and so moves out immediately in an attempt to reduce the exit fee in case the Unit did take a long time to sell.
(iii) On the basis of the interpretation contended for by the Respondent, the Appellant continued to be a resident in the Unit until she disposed of her right and in this case that means the 1st November 2005 when she was about 9 days into the third year of her residency. Mere vacation of the Unit was not sufficient to divest her of the status of resident or having residency. Until the 1st November 2005 the Appellant continued to have:-
(a) The right to be a resident and live in the Unit; and
(b) The right to receive services.
Whether or not she chose to exercise those rights is irrelevant to the questions in issue so long as she continued to have those rights, which she did.
(iv) The argument set forth is supported by the provisions of Sections 15(1)(a) & (b) RVA.
Sub-section (a) refers to the termination or finalisation of a right to reside concerning some right other than that of a freehold right, perhaps by way of a lease or licence but it could also refer to terminations for breaches of residency agreements.
Sub-section (b) clearly refers to the termination or finalisation of a right to reside concerning freehold interest by the sale and settlement of the interest. This clearly fits the situation that was before the Tribunal.
Unless interpreted in the way submitted, the sub-sections are meaningless and superfluous because they cannot stand with the provisions of sub-section (2).
On the basis of the interpretation contended for and the admitted facts, the Appellant ceased to be a resident on the 1st November 2005 and the calculation is to be made on that date.
Further, the Agreement is not in contravention to the Act and is quite clear as to the calculation of the exit fee; see clauses 1.1 & 14.”
- [35]While some of the above gives pause for thought, such as the second scenario in 47(ii), it is convenient to say at this point that I prefer Mr Rangiah’s submission. The short reason is that, while s 15(1) provides for two events ((a) and (b)) which may lead to a liability to pay an exit fee, in subsection (2) the requirement as to calculation of the exit fee insists that the day as of which the calculation is made refers to the date in event (a), bespeaking a deliberate decision not to make it depend on the date of event (b) – which event will inevitably be associated with a corresponding event involving the resident as per (a) which I suppose may occur (depending on how things turn out) either earlier or later. Mr Blaxland’s argument, refusing to accept the Act’s express distinction between a “right to reside” and the fact of residence (as found in s 16, as well as in s 15) seeks to read in the statutory language far more than the appellant’s argument assertedly did – and it does not do so at all persuasively.
- [36]On the s 68 point, Mr Blaxland disputed that the Tribunal had made the findings described in paragraphs 53, 61 and 65. Apropos paragraphs 54, 55 and 67ff, the respondent’s argument, as I understood it, was that s 68 did not apply because nothing relevant was “shared”; thus, it is said that “the appellant was to receive the ingoing contribution out of which she was to pay certain amounts to the respondent” (paragraph 55) – which may seem somewhat at odds with the control which the respondent had (and exercised) in respect of what Mrs Cay paid. Mr Blaxland’s submissions in this regard concluded:
“67. Agreed save that the Submission does not deal with the problem confronting the Appellant which is that, as already submitted, Section 68(1) simply does not address the situation of the Respondent and the Appellant because the ‘ingoing contribution’ is not to be shared between the respondent and the Appellant.
68. No comment.
69. Agreed save that the Submission does not deal with the problem confronting the Appellant which is that, as already submitted, Section 68(1) simply does not address the situation of the Respondent and the Appellant because the ‘ingoing contribution’ is not to be shared between the respondent and the Appellant.
70. Not agreed. Whilst a sale cannot take place without the operator’s consent it is not a cost of sale, either in common parlance or as contemplated by the RVA for the following reasons:-
(a) The costs of sale do not relate to consent to sale. Although the consent of the operator may facilitate the resident being able to sell the Unit the cost of that consent is not a sale cost. Sale costs would include such expenses as advertising, Solicitors fees on the conveyance, stamp duty, and other like fees. The fees for the consent are paid regardless of whether or not there is a sale.
(b) The fee for the consent was a fee particular to the Respondent and not one apt to be borne equally by the parties; it was for a service provided by the Respondent.
(c) Section 68(1) is clearly premised on the resident and the operator sharing the proceeds of the ingoing contribution. For this reason the Section stipulates the sale expenses being shared in the same proportions as the resident and the operator are to receive. In the instant case the Respondent and the Appellant did not share the ingoing contribution; the Appellant received it but was obliged to pay certain expenses of the Respondent.
(d) The Respondent further submits that in any event Section 68(1) does not apply to this particular transaction. The Section only applies to a termination ‘under this Act’; see Sections 56 & 57. Such terminations are provided for in Sections 52 & 53. In the case of the Appellant and the Respondent the termination was pursuant to the terms of the contract between them and not ‘under this Act.’”
That termination may occur pursuant to parties’ contractual arrangement does not in my opinion preclude its being also under the Act, in this context.
- [37]Mr Rangiah’s paragraph 63 was contested, the response being that the meaning of “right to reside” must be considered in each particular context in which it is used, the relevant one being that which was ventilated in the submissions about paragraph 47.
- [38]I repeat that I prefer the broader approach of Mr Rangiah, for the reasons advanced by him.
- [39]Mr Blaxland abandoned his contention that the appellant must pay the costs of the appeal even if she succeeded, in which he relied on s 100(8) of the Commercial and Consumer Tribunal Act, in deference to Tamawood Ltd v Paans [2005] QCA 111.
- [40]Leave to appeal is granted, also leave to amend the Notice of Appeal Subject to Leave in accordance with the amended Notice of Appeal Subject to Leave handed up at the beginning of the hearing. An order should be made for payment by the respondent to the appellant of $9,900 wrongly retained as an “exit fee”. The respondent should also be ordered to pay to the appellant $75.25, being the 10% share of legal costs which it ought to bear by reason of its enjoyment of 10% of Mrs Cay’s “ingoing contribution” as the appellant’s “exit fee”, which amount the respondent has unjustifiably withheld. It should, prima facie, pay the appellant’s costs of the appeal to be assessed on the standard basis, if not agreed. However, I am willing to entertain submissions about that.