A recent case decided in the NSW Consumer, Trader & Tenancy
Tribunal (CTTT) has served as a warning for
operators to ensure that the formula for variations in recurrent
charges are set out clearly and unambiguously in their village
contracts in compliance with the Retirement Villages Act
1999 (NSW) (Act) and the Retirement
Village Regulations 2009 (NSW)
In Daley v Scalabrini Village Limited (Retirement
Villages)  NSWCTTT 506 the resident sought orders for
repayment of overpaid recurrent charges paid to the operator (among
The resident's village contract provided that recurrent
charges will be varied according to a fixed formula based "on
the same CPI% amount as the Single Aged Pension is
The dispute related to whether the formula for variation to
recurrent charges was based on:
CPI generally; or
the indexation amount relevant to the Single Aged Pension
amount by Centrelink.
The resident said the formula was by reference to the general
CPI change (2.9% as it was at the time). The operator said that the
correct approach was that the formula was based upon increases in
the Aged Pension, and that the word 'CPI' did not create a
lack of clarity.
The operator also submitted that the recurrent charges had been
varied in the same way for a number of years and that method of
variation was accepted amongst the residents.
The Tribunal made the following findings:
the operator had misinterpreted the formula. Just because the
formula had been applied in the same misinterpreted way for many
years and was accepted by residents, it does not mean that the
operator is allowed to continue varying recurrent charges in that
way. The contract must apply.
the fixed formula under the village contract was found to be
based solely on CPI increases to the Single Aged Pension and did
not include any other variation (such as a budgetary increase). Any
overpayment made by the resident in excess of the CPI increase to
the Single Aged Pension was required to be repaid to the
the operator may only vary recurrent charges in the manner
stated in the contract. If that method is to be amended or applied
differently, it will only apply where it is also amended in the
contract and any amendment to the contract must be carried out in
accordance with the Act.
Reviewing variations in recurrent charges
This case serves as a warning to operators to ensure that their
processes for calculating and making variations in recurrent
compliant with their obligations under the Act and the
made using the correct source of variation; and
made according to the formula for variation set out in their
contracts as properly understood.
The case also serves to remind operators that the Act is there
to supplement and where applicable override provisions of a
contract, but that ultimately the terms of the contract are
Gadens Lawyers is able to assist retirement
village operators to review their contracts and formulae for
variation of recurrent charges.
This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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