Skip to content.

Home

Allens

Focus: Retirement Villages & Aged Care – November 2008

In this issue: We look at the relevance of public transport and precinct character in the decision to approve the development of residential care facilities and the calculation of retirement village exit fees.

Development applications for aged care facilities

In brief: The Queensland Planning and Environment Court recently upheld the Maroochy Shire Council's refusal to grant a development application by Retirement Properties of Australia Pty Ltd for an aged care facility, even though the appellant held a provisional allocation of government subsidised places, and it was accepted by the court that there was a community need for the facility.1 Special Counsel Rosanne Meurling and Paralegal Monique Dray report.

How does it affect you?

  • This case highlights the need for aged care providers to give careful consideration to planning scheme requirements when selecting suitable sites for their facilities.
  • A demand for the provision of aged care facilities will not always justify approval of a facility where planning scheme conflicts and amenity impacts are evident.
Background

Retirement Properties of Australia Pty Ltd (Retirement Properties) made a development application to the Maroochy Shire Council (the council) for approval of an aged care facility at Buderim on the Sunshine Coast. The proposed development included a combination of low-care and high-care facilities in two double-storey buildings, designed to provide accommodation for 120 people in 107 rooms. The proposal had received provisional approval for 60 Federal Government subsidised places (bed licences) under the Aged Care Act 1997 (Cth).

The site had an area of 2.13 hectares and was within a neighbourhood residential precinct class under the planning scheme. The site was situated at the end of a small cul de sac, adjacent to suburban residential development comprising predominantly detached housing. Rural residential development occurred to the west and south of the land. Car parking space for 34 vehicles, with a three-metre high acoustic barrier, was proposed.

There were 213 submissions lodged opposing the development, the majority of which came from local residents.

Reasons for the refusal

The council refused the application for the following reasons:

  • the scale of the development was incompatible with the precinct intent and the character and built form of existing premises (being detached dwellings);
  • the proposed development was inconsistent with a performance criterion of the relevant code for retirement villages and residential care facilities, as it was not located close to public transport; and
  • increased traffic from service vehicles would negatively impact on residential amenity and was inconsistent with the code for transport, traffic and parking, as there were inadequate connections to major transport interchanges.
The appeal

Retirement Properties appealed against the decision. On appeal, the Queensland Planning and Environment Court considered the nature of the conflict with the planning scheme, the effect of the development on the amenity of the residential environs, and the question of community need.

The council led expert evidence that the development was in conflict with the scheme as, despite being classed as a residential use, its design was institutional. It was contended that the location was remote from public transport, the development would affect visual amenity, and would create increased traffic in a residential area (with subsequent safety and noise considerations).

Retirement Properties argued that the planning scheme was deficient as it made inadequate provision for residential care facilities. It was submitted that occupants of residential care facilities are less mobile, and therefore the weight accorded to access to public transport was erroneous. It was further contended that the off-site impacts for a retirement village would be greater than for a residential care facility because of the greater independence of the residents in the former. Retirement Properties submitted that the 'acute need' for the development created a public interest in approval, notwithstanding any conflict with the planning scheme.

The decision

The court found that the development's proximity to public transport and commercial services was relevant and that there were sound planning reasons to ensure facilities were located appropriately to access these services. The court determined that the development proposal created amenity impacts on surrounding premises, and was visually incompatible with the character of the area, which comprised low-density, detached residential buildings. In relation to the issue of need, the court noted other proposed developments in the region, including a conditionally approved application by Retirement Properties for a 116-bed development in the Buderim region that could take up the 60 provisionally allocated places. The court recognised that, while it is no doubt ideal for aged persons needing Commonwealth subsidised care in a residential care facility to be able to access the care in close proximity to where they live, this is not imperative.

Despite the court's acceptance that a residential aged care facility is an 'essential community facility', and acceptance of expert evidence regarding the need for such facilities in the region, the court dismissed the appeal and upheld the decision to refuse the application. In doing so, the court cited adverse effects on the amenity of the surrounding residential area and conflict with the planning scheme as reasons to uphold the council's decision.

Implications

The case shows that planning considerations regarding public transport and precinct character will be relevant when making a decision whether to approve or refuse the development of residential care facilities. In addition, establishing a legitimate community need for the facilities will not be sufficient to overcome conflicts with the planning scheme, where other, more suitable, locations are available for development.

Return to top

Calculation of exit fees

In brief: In the recent Queensland Commercial and Consumer Tribunal decision of Saunders v Paragon Property Investments Pty Ltd, a former resident's claim that the exit fee charged to her should have been calculated 'pro rata on a daily basis' was dismissed. Senior Associate Rebecca Barr and Lawyer Alma Alic report.

How does it affect you?

  • The decision is only binding on the parties to the action. However, it gives some guidance on the way the tribunal may decide the issue if raised in future proceedings.2
  • The calculation of exit fees yearly has long been a practice of the retirement villages industry. The decision supports an interpretation of the Queensland Retirement Villages Act 1999 (the Act) which allows exit fees to be calculated yearly.
  • An operator with villages in other states should consider and follow the terms of the Retirement Villages Act applicable to the particular state with regard to exit fees charged to residents in those villages. In particular, New South Wales operators are obliged to calculate exit fees (called 'departure fees' in that state) on a daily basis.
Background

In Saunders v Paragon Property Investments Pty Ltd,3 a former resident claimed to have been overcharged in relation to the exit fee, and certain other costs, upon leaving the village.

The former resident's residence contract required her to pay an exit fee of 5 per cent of the sale price of the unit per year or part year of the former resident's occupancy, to a maximum of 30 per cent of that sale price. The former resident obtained a right to reside in the village on 23 October 2003, vacated it on 23 October 2005 and settled the sale of her unit on 1 November 2005.

The scheme operator charged the former resident an exit fee based upon three years of occupancy.

The former resident submitted that s15(2) of the Act did not permit the scheme operator to charge her an exit fee calculated on an entire third year of occupancy. Section 15(2) required an exit fee to be calculated 'as at the day' the resident ceased to reside in a unit. The former resident claimed that Parliament had imposed a pro rata daily calculation of the exit fee by specifically referring to 'the day' rather than 'the year' in question. In effect, Parliament had not only determined the point in time at which the exit fee must be charged, but also the method of its calculation.

The scheme operator submitted that Parliament had not prescribed the method of calculation of exit fees, only a point in time in a particular year at which exit fees were to be calculated.

Issues
  •  Was s15(2) of the Act, and in particular, the words 'the day', to be interpreted as meaning 'on a daily pro rata basis'?
  • Did the scheme operator overcharge the former resident in respect of the exit fee?
Decision

The tribunal found in favour of the scheme operator.

The claim that s15(2) was to be read as 'on a daily pro rata basis' was dismissed, the tribunal noting that it was impossible to say that those words had been omitted by the Parliament. The tribunal found that Parliament had not prescribed the method of calculation of exit fees, only a point in time in a particular year at which exit fees were to be calculated.

In response to the former resident's assertion that the method of calculation of the exit fee allowed the scheme operator to 'double dip' (by charging the former resident an exit fee for a full third year, when the new resident would also be charged an exit fee for most of that year), the tribunal stated that the scheme operator was entitled to make a profit and the viability of the village depended upon the ability to make a profit from exit fees. Though the exit fee charged to the former resident was harsh, it was not unfair. In that regard, the tribunal noted that:

  • exit fees benefit residents by allowing payment of the fee to be deferred; and
  • the former resident had legal representation when she purchased the unit.

Further, the tribunal observed that it was:

...a case of swings and roundabouts for the scheme operator. 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...The arrangement does not unfairly favour the former resident when the swings and roundabouts of payment of exit fees are considered.

The claim was dismissed.

 
Footnotes
  1. Retirement Properties of Australia Pty Ltd v Maroochy Shire Council & Anor [2008] QPEC 61.
  2. In the subsequent tribunal decision of Cossey & Pye v Australian Property Custodian Holdings Ltd as Responsible Entity for the Prime Retirement and Aged Care Property Trust [2008] CCT VH005-06 and VH001-07 (9 October 2008), the tribunal again found that s15(2) of the Act does not require a daily pro rata exit fee calculation and endorsed the tribunal's reasons in the Saunders decision.
  3. [2008] CCT VH002-06.

Return to top

For further information, please contact:

Return to top

Share with

What are these?

 

 

Recent Real Estate publications