The Queensland government is being accused of smuggling aged and retired victims through disingenuous complaints handling, regulatory investigation and mediation processes that encourage unscrupulous operators to pay out thousands of dollars in hush money, in an effort to cover up serious failures in legislative integrity and government waste.
The effectiveness of statutory authorities and justice administration across the housing industry in Queensland are seriously inadequate. But what is much more alarming is that the state’s legal system is trading government and bureaucratic accountability for social misery.
My mother lives in a retirement village. I helped her sell her home in Mount Isa in North-western Queensland about 7 years ago. We achieved a sale price well above her expectations. Upon settlement, our family assisted her with the stressful transition into retirement accommodation in Townsville.
The North Queensland city was where her children lived. Four of the six adult children and a few grandchildren lived nearby. The extended family included two grandsons that were contracted with NRL rugby league clubs at the NQ Cowboys and Sydney Roosters.
So the family connections and liveability of Townsville was the best life could offer an aging grandmother. The family was all excited to have Mum living back in Townsville.
Getting into the retired living
My mother purchased into the retirement village through a real estate agent who used a standard Property Agents and Motors Deals Act purchase contract with the required disclosures for a retirement village scheme or community title scheme. The disclosures included the retirement village operator’s schedule of terms of ongoing services and charges.
The attached appendix to the contract clearly defined a value depreciation schedule that stripped the market price of the dwelling by 25 percent effective over the first 6 months after taking possession. The purchase price at the time was $230,000. The unit features two bedrooms, two toilets, garage, storeroom and courtyard.
As one of three sons and the only licensed real estate professional and investor in the family, my advice to Mum was not to buy into the retirement village. Aged in her early 70s and enjoying an active lifestyle, committing the majority of her savings to retirement living was premature in my opinion.
For my mother, it wasn’t about the money or wealth plan. The retirement facilities she had chosen offered the best value in comparison to other available and comparable properties in Townsville.
Nevertheless, on balance of her current and future needs, I thought the deal was still not sustainable to her lifestyle or economically feasible.
The probable financial loss in the property’s equity, as well as the perpetual ongoing fees and service charges, meant her capacity to live a quality life into to her 80s and 90s would be challenging if not impossible.
At the time, there was a very high likelihood that she would be living on or below the poverty line. She was eligible for a pension but chose to work a few hours a week to stay active and healthy. She was still healthy enough to live independently.
Still, the peace, security and safety offered by the retirement facility were her main priorities so she completed the purchase and we all respected that decision.
Risks and hidden costs
The family was well aware of the pros and cons of the liabilities before the sales contract was completed.
With the family seemingly settled in Townsville, she felt a sense of security and stability so the risk of a premature exit out of the facility was not a foreseeable scenario. Not even in the event of acute illness or as a consequent of family migration away from Townsville.
The promise of specialised integrated housing, social and health care services offered by the facility operator within the grounds of the complex was attractive. She could transition to an aged care facility and would not need to change address again.
Despite the additional capital required and 80 percent pension deductions for the progressive aged care service onsite, in my mother’s mind, it offered a visible pathway from stable semi-independent living to acute pre-palliative care if needed.
However, now all of her adult children except my family and a few grandchildren and great-grandchildren have moved away from Townsville. In the past 12 months, she has been hospitalised at least a half a dozen times.
Since my mother moved into the facility the operator has sold the facility to another operator. Fortunately for my mother, as an incumbent occupant at the time of the sale, the terms of the original sale contract remain. However, the price of entry and ongoing service fees for residents that have purchased into the facility are much higher than my mother’s fees and charges.
Costs of retired living
Maintenance, repairs and management of the facility are organised by the resident’s committee and the nominated facility manager.
Each resident pays general service and maintenance fees which amounts to approximately $3,600 per annum. This applies to approximately 50 percent of the residents. Due to the sale of the facility, residents that moved in after 2013 pay monthly fees of $5,000 per annum.
Just last month an extra $100 per annum was added to my mother’s resident service charges. No additional services were provided.
A component of the facilities revenues is derived from maintenance fees. These fees are carried over annually in the accounts for any unforeseen asset repairs or maintenance. This fee functions similarly to a sinking fund in a private residential or commercial community title scheme.
Council rates, water charges, building insurance and employees wages and all necessary resources needed for the management of the facility is included in the profit and loss budget.
To the extent of TREN’s investigations, all of the operational, management expenses and overheads of the facility are serviced and supported from revenues receipted from residents. Whereas in private residential community title schemes, the overhead of management is costed in commissions charged by the outsourced body corporate manager.
Additional expenses of electricity, phone and contents insurance for each lot must be paid for by the resident as well as any additional special service charges for cleaning as needed.
For newcomers who choose to have the emergency call service, an additional ECS charge applies in this example. For pre-2013 residents, the ECS was included in the general service schedule negotiated upon purchase with the previous operator.
Comparison to private community living
The defined residence of the retirement village dwelling is leasehold. Unlike a private dwelling in a community title scheme where the title is freehold.
Renting, licensing and permits are also forms of tenure in retirement villages. The management of these facilities is held within the committee comprised of elected residents.
As a comparison, private dwelling owners usually appoint or contract an independent accredited body corporate manager by resolution at an AGM.
And although the term of management for the manager is usually prescribed in a management contract with the independent body corporate manager, the retirement village scheme, on the other hand, is exclusive to the management rights acquired with the acquisition of the facility.
Retirement village facilities are modelled on the holistic service model defined by the legal requirements of governance and the business model of the operator. The sector is controlled by specific and associated legislation for retirement villages. The Retirement Village Act 1999 is the current applicable legislation.
Academic push for change of laws
The Queensland Minister for Housing and Public Works Mr. Mick de Brenni introduced the Housing Amendment bill proposing changes to standard contracts for prospective buyers into retirement villages aiming to stamp out unscrupulous operators.
Despite changes being made to the Retirement Village Act in 2011 and 2016 including a review of the legislation in 2012, two Queensland University academics in economics and law have lobbied the government to standardise the purchase contracts for retirement villages.
These are their recommendations to the 2012 legislation review:
Recommendation 1: Amend the RVA (Retirement Villages Act) to prescribe a shorter and easier to understand format for PIDs (Public Information Documents), with the tenure [i.e. freehold/leasehold/licence/other and term as applicable], any participation in capital gain/loss and exit fees being clearly stated.
Recommendation 2: Amend the RVA to require a copy of the lease/licence and/or other accommodation terms or RV rules attached to the PID, or otherwise to form part of it, be provided as clearly identified separate documents.
Recommendation 3: Amend the RVA to require that legal and financial advice must be obtained by prospective residents before entry into any RV agreement; with confirmation of receipt of that advice to be provided to the RV operator prior to signing of any agreement. The consequence of a failure by the RV operator to obtain such documents could be that the RV operator would be precluded from charging an exit fee to the resident. The onus being for the RV operator to show advice was provided to the prospective resident at the relevant time.
Recommendation 4: Amend the RVA to prohibit RV operators from passing on any costs associated with the RV agreement (other than the actual Titles Office registration fee for a resident’s lease) to the resident.
Recommendation 5: Amend the RVA to require any RV with a website must make a copy of its current PID freely accessible online.
In our experience helping our mother understand the pros and cons of purchasing into a retirement village, the disclosure of these matters was addressed by the operator through the diligent work of the sales agent engaged by the operator to market the property.
Housing amendment bill
Now as an aged pensioner approaching 80 years of age, my mother is burdened with increasing costs for standard utilities and village outgoings. She is just scraping by and constantly worried about her health, finances, village rules and friends also struggling. Not that living in a private dwelling would have avoided these worries.
Freehold title could have meant she had leverage of the accommodation of a small house or unit to generate residual cash flow, have family and friends stay more often instead of being constrained by the occupation rules of the retirement village, and still, have liquidity and leverage of fair market exchange when she needed to move on.
Without diligent family support, my mother’s circumstances would be worse off and may, in fact, fall into the social housing or homelessness business model.
In the aged care and social housing sector, the State government has explicitly said it wants to have greater influence and have a larger share of the housing investment and social housing operator market in Queensland, purely driven by money and raising revenue.
But the changes being proposed by the Queensland government are not addressing the real causes of financial stress and human exploitation.
These are the government’s proposed changes
- An 18 month buyback provision
- A requirement on retirement village operators to prepare a closure plan, and have it approved by the Department
- A requirement on existing scheme operators to give the Department notice and seek approval to transfer control of a retirement village to another entity
- Behavioural standards for residents and operators
- Changes to pre-contractual disclosure
- A requirement for unit condition reports to be prepared
- Changes to how retirement village budgets are prepared along with the setting of the general services charge
- A requirement to prepare a redevelopment plan, and have it approved by the Department
The proposed amendments will require retirement village operators to use approved forms but these statutory instruments won’t be available until the legislation has been passed.
Nowhere does the government and the proposed housing bill address the ineffectiveness of the mediation system, the tribunal system, the Office of Fair Trading (OFT) in handling complaints. The system is failing to serve and protect the vulnerable and fight for real victims.
The overwhelming majority of residents take the right decisions and the operators behave in a reasonable manner, as has been our experience.
If the application of integrity and ethics was applied in the existing housing system and the administrative powers of the legal system focused on justice for which the government is entirely responsible, attitudes and habits of poor governance and management would be deemed socially, culturally and commercially intolerable.
Operators and people would be made accountable based on existing laws and regulations.
It is a self-regulation approach with a management model that focuses on data, intelligence and prevention with early intervention in feedback management, complaints handling and fair trading investigation.
Smuggling victims in the legal trade
Consumers and stakeholders are being led to believe that the statutory authorities like the OFT will take action in the housing industry to protect victims. Consumers raise issues and submit complaints in good faith expecting fair, diligent, respectful investigation by the OFT, tribunals and the justice system.
However, the effectiveness of statutory authorities and justice administration across the housing industry are seriously inadequate. But much more alarming is that the state’s legal system is trading bureaucratic accountability for social misery.
Prospective genuine victims are being exploited with erroneous and disingenuous policy and guidance material sanctioned by the government and advocated by industry bodies.
When a genuine complainant with an opportunity for learning and improvement comes forth as is encouraged by the statutory authority’s glossy flyers and websites, the statutory authority instead acts to mitigate the threat of accountability with specific strategies of diversion, defence and deception.
First are the prescribed forms and if incomplete, advice of a procedural non-compliance to the complainant is sent back. A prescription of monetary compensation is required by the complaint form even though the desire of the victim is protection and prevention not persecution.
With the money factor prescribed into the process, the next stage is manufactured denial and defence by respondents, in this case, the operator.
And thirdly, the deception occurs by the OFT validation of the denial by drawing attention to the victim’s unintended claim for compensation, concurrently directing the victim to show cause with a greater burden of truth to the tribunal in spite of a verified breach of law by the operator.
Hence, the OFT directs the complainant to the money on purpose to avoid administrative scrutiny, liability and consequence, whilst effectively and efficiently metaphorising a complaint seeking prevention to a claim for money and greed.
In my experience working through the retirement village options with my mother, the disclosure of contract terms was facilitated by a professional real estate professional. In this context, the disclosure laws were well defined. We knew the deal and my mother and family opted to accept the risks!
Case of disingenuous justice
But what occurred in a recent complaint investigation in North Queensland demonstrated the strategies and tactics of the OFT to protect and dismiss a clear case of unlawful conduct by an operator. This demonstrates the crux of the problem; victim smuggling and hypocrisy of government injustice!
Based on records and statements by a complainant, the OFT’s written response was that the operator had taken adequate steps to correct the problem of fraud, etc.
The OFT’s correspondence says if its response is not satisfactory to the complainant, the complainant is advised to lodge an application to the Queensland Civil and Administrative Tribunal (QCAT) to seek compensation. Not make the operator accountable. No! But get paid off.
In this specific case, the operator even admitted the breach in writing by sacking an employee who was blamed for the systematic breaches including fraud, negligence, misleading and deceptive conduct, not to mention the actual financial losses from systematic incompetence.
Before involving the OFT, the complainant had met the operator’s director and disclosed the problems as part of an internal meeting. The director’s first response was to deny his office was responsible and offered a financial inducement to end the matter. The complainant thought it was strange that he would deny any wrongdoing but offer a financial payment anyway.
Only after attempting to handle the matter internally with the operator, the complainant then notified the OFT with a formal complaint.
The OFT said they investigated the matter and received a response from the operator who admitted the fraud and misconduct had occurred, contrary to the written response of the operator denying any wrongdoing.
The operator reported to the OFT that they dismissed an employee for the unlawful conduct. The OFT let the operator off and transferred the burden of proof and truth back to the complainant to lodge an application with the QCAT.
The complainants did not pursue a QCAT application because they were disgusted with the OFT and had lost all faith in the administrative justice system.
But if the complainants did proceed with a QCAT application, even before any hearing, the parties are referred to mediation to settle the matter with the focus being on money or compensation. The complainants said they were not seeking money but wanted to prevent other people being put in harm’s way by the operator. In directing the complainant to QCAT, the OFT failed to mention that mediation and a negotiation of compensation are mandatory as part of the tribunal process.
Under the tribunal mediation process, a financial offer is provided by the respondent and the complainant is coerced to accept, reject or provide a counteroffer. The mediator has a set time limit to resolve the issue. In my experience, this time is usually 30 minutes. But the time constraint is a mechanism of pressuring the parties to make a decision to settle on a compensation amount, purposefully designed to keep people out of the actual “justice system”.
Having been in a number of these mediations on behalf of clients, the mediator applies the time limit, loss of money and harsh tribunal setting as pressure on the parties to reach a settlement. The mediator says the mediation is confidential and the decisions made at mediation cannot be used at the tribunal hearing. Yet, the mediator serendipitously knows the tribunal would be less accommodating in awarding compensation.
Once again, after all of what the complainant has endured, still the burden of proof and truth rests with the complainant.
So why does the Office of Fair Trading exist? Why is the complaints handling system so ineffective and burdensome for genuine complainants to focus on system improvement?
TREN’s investigation of the North Queensland fraud complaint found that the operator had been known to the OFT from other complaints. Other operators in the same city knew of the agency and the director and said they would never deal with them because of the unethical and unscrupulous way they do business.
The other operators knew of many tenants and landlords that had been affected by the operator because they moved on. Yet the complaints handling system, OFT, mediation process and tribunal system fails to address the minimum standards that already exist in the law for operators to behave and protect vulnerable consumers.
Why create more draconian laws when the integrity and effectiveness of existing laws are being dismissed, denied and eventually funneled into a game about money?
If the complaints from the elderly in aged care were treated by the OFT and tribunal system as opportunities to improve justice and the statutory authorities and tribunals were mandated to focus on the rule of law, fairness and social justice instead of coercing financial pay-outs, Queensland would have fewer victims and a happier more inclusive society.
Hence, victims are being smuggled through a false and deceptive system of justice designed to pay off unscrupulous operators and recycle unnecessary pain and hurt on vulnerable Queenslanders.
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