Aveo court case widens scope

A class action against Aveo has been widened to include retirement village residents who felt aggrieved by what law firm Levitt Robinson described as “dreadful management agreements and service contracts”.

A directions hearing has been granted by the Federal Court’s Justice Bernard Murphy for Levitt Robinson to this month launch a case on behalf of hundreds of residents. The action names Robert Michael Luke, who is a co-executor of his deceased father’s estate, as the chief plaintiff.

Before Mr Luke’s parents died, they lived at Peregian Springs Retirement Country Club in Queensland, a facility managed by Aveo. 

The legal action was pre-empted by media coverage last July of Aveo residents who alleged the village operator had treated them unfairly.

Among the accusations levelled at Aveo were its practice of “churning, gouging, ignoring safety issues and misleading marketing”, according to Fairfax Media.

The complainants say Aveo’s contracts are overly dense, the exit fees are crippling and when residents or their estates sell their village apartments back to the operator, they are forced to accept knock-down prices.

At the core of the original class action is the village operator’s strategy of changing freehold titles to leasehold, named the Aveo Way.

The court will hear that as a result of the Aveo Way, residents have seen their properties fall in value as their titles are converted to leases that do not command as much when sold.

The firm is conducting the case on a no-win, no-fee basis. If the action succeeds, residents who joined it will forfeit up to 35 per cent of the increased value of their properties. Higher valuations are expected to result from the units being sold with freehold titles as opposed to leaseholds.

A separate class action against Aveo is being considered by law firm Maurice Blackburn. It would mostly focus on unfair contract terms, such as the level of exit and maintenance fees, and is only open to residents who sold out of an Aveo property after 2013.

Maurice Blackburn told YourLifeChoices on Friday that its “investigation into this potential action is progressing well”.

“Our investigation is examining whether Aveo contracts contravene Australian consumer law. We are investigating whether these contracts include terms that could be deemed unfair,” the law firm said.

“We intend to review all fees charged to residents upon exiting their unit. Aveo has been accused of charging exorbitant exit fees (often referred to by Aveo as deferred management fees).

“Typically the exit fee charged by Aveo is between 20 to 40 per cent.”

The firm is also exploring whether other terms might be regarded as unfair, such as:

  • capital gain/loss terms which entitle Aveo to 50 per cent of any capital gain but the resident bears 100 per cent responsibility for any capital loss
  • terms which require the resident to bear the cost of refurbishing the unit
  • expensive maintenance fees that continue after the unit has been vacated, and
  • making the resident responsible for the costs of finding a new resident.

Maurice Blackburn said it had received “a significant volume of interest from former residents of Aveo”.

In a statement to YourLifeChoices, Aveo said it would “staunchly defend the class action filed in the Federal Court of Australia by Levitt Robinson”.

“We remain confident that we can demonstrate that we have met our statutory and other obligations and our steadfast commitment to our residents’ welfare and wellbeing,” Aveo Chief Executive Geoff Grady said.

Do you know anyone who has joined the class action against Aveo? Would you ever move into a retirement village? Do you have any favourable experiences of living in a village?

Related articles:
Aveo makes admission
Minister responds to scandal
More village scrutiny required

Written by Olga Galacho

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