14th Jul 2017

Retirement village residents consider class action against managers

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older man looks off into the distance
Olga Galacho

Law firm Levitt Robinson believes the noose is tightening around the necks of retirement village managers taking advantage of elderly residents.

Principal of the firm Stewart Levitt, who addressed a group at Melbourne Town Hall yesterday, told YourLifeChoices that he intended to “put a blowtorch to the belly of a sector imposing unconscionable conditions on retirees”.

“We are seeking compensation for those whose loss has crystallised because of draconian conditions imposed by virtue of management and service agreements,” said Mr Levitt.

The town hall meeting was a call to action for aggrieved residents of Aveo retirement villages keen to participate in a class action against the company, whose key investor is Malaysian businessman Lee Seng Huang.



Aveo has come under fire for inscrutable practices and taking advantage of elderly residents. The ACCC is also investigating allegations of misleading conduct, unfair contract terms and unconscionable conduct.

“They have a business model that needs to be reformed,” said Mr Levitt.

Asked if other major developers of retirement villages may also have imposed unfair contracts on residents, he said: “Aveo haven’t been alone in pushing the envelope in this regard.”

Mr Levitt confirmed that his firm was “well advanced in being able to launch a class action against Aveo”.

“People thought they were buying an orange but they are now complaining they have ended up with a cumquat.

“Essentially, Aveo has positioned itself to have unconscionable control over people’s properties and estates,” he said.

Mr Levitt said Aveo was using a common ploy of corporate companies to nurture a “curry club” of a few compliant stakeholders to support management’s agenda against the rights and wishes of the majority of village residents.

“There is alleged to be a common strategy to confer patronage on residents at some villages as an artifice to procure support for management – something which Aveo has been accused of doing by some of our clients,” he said.

“It is a divide and conquer ploy which has been used throughout the ages,” he said, adding that recent press advertisements promoting “high satisfaction” among Aveo residents likely reflected the views of those who were compliant with the company’s management.

Related articles:
Villagers slam retirement group
Minister responds to Aveo scandal
ACCC to investigate Aveo





COMMENTS

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Kali-G
14th Jul 2017
10:15am
Should look at the parent company, MULPHA....will find lots of bad things
MICK
14th Jul 2017
10:21am
Who' Olga?
Good luck with winning a classa action against a company owned by a billionaire who has deeper pockets than any law firm in the country and can keep a case going forever.
I'll be surprised if this is other than sabre rattling and goes anywhere other than focusing public attention on a bad industry which has been doing this for many decades. Not as though abusing their elderly patrons in 'new'.
At wort the Malaysia billionaire who owns these cesspits called retirement villages may transfer the assets to a new company and sink the ship, complete with court rulings and judgements.
What is needed is LEGISLATION, not talk. But when you are in government and getting POLITICAL DONATIONS don't expect the well being of elderly to matter one iota. The bastards will let the storm die and then it will likely be business as usual.
Rosret
14th Jul 2017
2:51pm
Let's hope for both, Mick. A change in legislation and winning a law suit.
Once again, foreign businesses are seeing a gentle Australia as a soft target. It's a shame we are going to have to toughen up but they have hit the gas market, the electricity commission,the rail system and private health insurance and it won't be too long before parliament is going to have recognise the need to protect Australian industry.
Old Man
14th Jul 2017
4:56pm
I don't know whether I need a holiday or if your latest holiday has changed you MICK but I find we are in agreement on a lot of things. Whilst legislation to protect people, many of whom are vulnerable, there will always be shonks to exploit people. If the politicians ever get around to enacting legislation, let's hope that there will be clauses allowing for inspections without notice with access to all areas and heavy penalties for breaching the Act.
TREBOR
15th Jul 2017
2:37am
I suspect, OM, that you and Mick have always been on the same page.

As a grunt you should know the difference between legislation and actual performance...

As for my good self - add in connections with the security services - from which you never get out with a whole skin and will be discredited (which is why I will not stand for public election) - and you will see why we are all - all good and decent people - on the same page.

Once you sort through the rhetoric and the implied meanings of what someone says - you will find at the bottom a very basic truth.

We are all in the same boat, and someone else is poking holes in the hull....
dougie
14th Jul 2017
10:30am
Why does it take such an action instigated probably by a law firm which sees the possibility of a quick buck to start a very necessary witch hunt ? Where are the Legislators and their inspectorial staff who should be examining all such contracts for fairness and legality before they can be used.
Each State has their Crown Solicitor or Attorneys General and it should be Law that each pro forma contract must be scrutinised and approved prior to use. This should also apply to those contracts previously signed. Such Legislation should be included in any licence to operate a facility either retirement village or nursing home. This should apply to all facilities including those operated by State - Church - NGO or Private providers. A profit can be made by operating within the limits and without the rip off activity.
Not a Bludger
14th Jul 2017
10:42am
Agree with you entirely, Dougie.

Only worse are the money grubbing lawyers who run these class actions and their completely amoral litigation funding mates.

Class actions should be illegal.
TREBOR
14th Jul 2017
11:26am
'legislators' have no balls/guts and only listen to the latest donor or lobby group that gets in their ear.

That is why we need to get rid of the lot, outlaw their ideologically based approach to governance of MY nation, and install guards over the guards to ensure that the guards guard YOU properly...

(as elsewhere - I have no ideology other than duty first and the preservation of the realm against all enemies, foreign or domestic. Now - if only we could see who is the enemy in this proliferation of Fifth Columns... I know.. I know... a contradiction in terms - there can be only ONE Fifth Column... but at this time we have many claimants to the title)...
Rosret
14th Jul 2017
2:55pm
Sadly, because it is the only way an individual can be financially recompensed. If they win then legislation will easily follow and if it doesn't succeed it will be bought to light and hopefully things will change - even if it's just to make people aware of what is going on out there.
Onemore
14th Jul 2017
11:24am
The last commentary aired on television about this saga was from the mouth of a politician who said that they were still looking at review on all this that had been undertaken a few years back, I cant remember when the last review had taken place, which was after the first review.
I reckon I heard him say they were looking into the matter.
Once again it shows just what the politicians think of the public, as I notice there isn't too many reviews happening when they want a pay rise.
Onemore
14th Jul 2017
11:24am
The last commentary aired on television about this saga was from the mouth of a politician who said that they were still looking at review on all this that had been undertaken a few years back, I cant remember when the last review had taken place, which was after the first review.
I reckon I heard him say they were looking into the matter.
Once again it shows just what the politicians think of the public, as I notice there isn't too many reviews happening when they want a pay rise.
Maggie
14th Jul 2017
11:30am
All sorts of people take advantage of retirees. I went to look at a village and the sales manager was gentle sweet and kind, told me she could arrange everything from the sale of my home down to the packing and clearing up, and unpacking in my new home.

She would see to it that I had a lovely estate agent to work with etc. I was only 5 minutes away from the place and driving when a voracious estate agent phoned to make an appointment within hours.

He came and like an undertaker was oh so gentle and gracious and sweet and helpful. He started by asking how much I needed to get. Things changed very rapidly when I told him I wasn't a fool and wanted the best price I could get. My feeling was that he would have given me enough to buy the retirement place and a wee bit extra, having bought the property himself and then sell it for a profit to be shared with the sales manager in the retirement village.
GrandmaKathleen22
14th Jul 2017
11:37am
I sold a house many years ago myself. Then I organised a solicitor and told the purchasers to organise their own solicitor.
I would do that again.
We have a relative who has come out of a retirement village because they hated it and built a new home for themselves instead.
I worked in a legal office before I was married and know it is not that scary to do. Organise your conveyancing solicitor beforehand and don't share with the buyer. They must have their own legal rep.
You are wise and people need to be like you and not be taken for old fools.
Rosret
14th Jul 2017
3:02pm
Maggie, it is illegal for a real estate agent to buy your property for his own benefit(other than commission).
But I am glad you weren't conned by the soft talk. Horrible isn't it.
I have heard that in Canada the buyer and seller need different real estate agents and they share the commission. After observing what is going on in this seller's market I think it would be a great idea to introduce here as it is most certainly buyer beware.
Old Man
14th Jul 2017
4:52pm
I agree GrandmaKathleen22, it's all well and good to use the one solicitor for vendor and purchaser to save money but if anything goes wrong, which side does the solicitor take. I have found that the best real estate agent is the one recommended by friends, not the one with the best spiel.
Maggie
14th Jul 2017
11:35am
Class actions, even against the giants, don't always fail. Look at the tobacco companies. I hope the women suing the company which has ruined their lives with those horrible breast implants and Johnson and Johnson for those dreadful vaginal prolapse mesh implants all win their cases.
GrandmaKathleen22
14th Jul 2017
11:40am
Agree! I would not hesitate to do that with solid research and planning.
Law is not that scary and all solicitors are not scammers.
No group is all good or all bad.
TREBOR
14th Jul 2017
12:57pm
I think the problem re lawyers, Grandma, is that they are bound to Law, and are not necessarily even persuaded that Law as written often needs to be changed, or at the very least, its administration needs to be changed, so that it becomes the true servant of the people as sovereign rather than their master in the hands of vile opportunists and despotic minded petty tyrants.

It is my personal view that lawyers need to be more pro-active in pursuit of Right rather than the often self-serving dictates of Law as written.

Let Right Be Done - is the appropriate motto.
ex PS
17th Jul 2017
9:55am
TREBOR, if by right you mean just, it must be noted that we do not have a justice system, we have a legal system. Although a lawyer may argue the case with the view that his/her client is morally right, the magistrate or judge has no other option than to apply the rule of law. In such a case the lawyer would have not done the right thing by their client and would be disbarred for negligence.
I think it is time that we charge any current government with the task of continuously reviewing our legislation and ensuring that it is allowing for "Right to be done" as you suggest.
Too much of their time is wasted on petty politics such as trying to blame uncontrollable or irrelevant events on either the incumbent government or the previous holders of that station. The way they are all behaving reminds me of my days in a Primary School Playground.
TREBOR
20th Jul 2017
12:27am
THAT is clearly why our judicial system needs to be changed to suit the 20th Century - then we can move forward into the 21st.

Is it the Rule Of Law that dictates that a judge/magistrate MUST find in accordance with the perception or interpretation of what a specific law means? In many case, many such 'laws' should have been struck down at the first post (not the last post for anyone dragged up under them) - and the judiciary need to become aware of what their true position is - not just a mouth-piece for legislation and the way it can be distorted in the hands of those with 'power' - but in accordance with the Rule of Law that says that a law may only apply when Right is done. If it does not - then it is not properly a Law and cannot be enforced.

The rule of Law is based on the principle of doing right... it is not bound by abuse of language or or reality...... such things lead judiciary to the scaffold following popular revolts....
Olga
14th Jul 2017
11:51am
Hi Mick: the Malaysian businessman owns less than 25 per cent of Aveo, so he isn't in a position, as far as I know so far, to transfer the assets anywhere. As a stock exchange listed company, Aveo has many owners. But I agree with you, legislation to protect elderly consumers from unfair, asset-stripping contracts is long overdue.
TREBOR
14th Jul 2017
12:51pm
25% ownership is the theory anyway - in The third world - of which we are rapidly becoming part - 25% means 99% by proxies etc...

Get in tune with Third World Ruling Oligarchy Despotism Banana Republic economics, please... beezines eez good in El Granda Republica Da San Austrador.... compadre.. ven bedder!! ..... beeziness ez BOOMING!!!
George
14th Jul 2017
1:31pm
I agree with TREBOR's comment that 25% ownership + proxies, etc (and possibly collusion with other large shareholders) can rule the show.
Also, agree with the comments of "floss" below that this is treason by our politicians - to allow the care of our Aged to be an Investment for a foreigner in a sector where suitably strong Legislation is lacking.

Can't understand why a Royal Commission hasn't been proposed by anyone given our aged are being horribly treated in this sector?
floss
14th Jul 2017
12:02pm
What are our over paid Public Servants doing they are paid to keep a eye on these things.Our Federal Government will make a lot of noise for a day or so then it will be business as normal for these overseas companies.The Liberal party are just plain lazy a do nothing party they let these foreign owned companies rip the guts out of this country. What they have done to this country is almost treason.
TREBOR
14th Jul 2017
12:52pm
They are watching over their retirement funding and their perks..... be kind .. that's enough work to do for anyone.............

A Fifth Column to be sure.....
Canman
14th Jul 2017
2:35pm
I dearly hope that the lawyer is not just piss and wind and that the class action against these unscrupulous owners comes to fruition. However legislation is sorely needed to bring this industry into line but what Is the chance of that happening with the pensioner bashing LNP government now in power. Bugger all I'd say.
Jennie
14th Jul 2017
3:09pm
This is an interesting issue. The problem also with Aveo is that not all residents have the same contract. That has to be updated.
"“It is a divide and conquer ploy which has been used throughout the ages,” he said, adding that recent press advertisements promoting “high satisfaction” among Aveo residents likely reflected the views of those who were compliant with the company’s management."
YES, 98% of Aveo residents are apparently satisfied with their deal.

I know from my experience in a retirement apartment "village" (not Aveo) the following:
-If you disagree with management you can be victimised, not just by the management but by residents themselves who arse lick the management. Management therefore has favourites in the form of "Ambassadors" - residents who promote the marketing of the "village" and receive rewards.
-Our deal is worse than Aveo's in spite of employing a lawyer to go through the contract very carefully and challenge the bad parts.
-All residents do not have the same contract. This causes dissension between residents.
-Management is secretive.
-We have been threatened with the management's "5 lawyers" if we make certain complaints.
-Defects are not fixed at all or not fixed in a timely manner.
-We are charged more than Aveo residents for eg, changing a light bulb.

And so on...
TREBOR
14th Jul 2017
4:06pm
.. one reason you'll never get me there..... pick me up off the footpath where I fell in action....
TREBOR
14th Jul 2017
4:08pm
It is absolutely the most disgusting thing that groups like this bully retired people and play games with them to keep them subdued and under the thumb, and there is not a squeak out of those set up to protect people in this society.

By George.. methinks we need a good scaffold and a hooded hangman... Igor, bring ye the flaming pitch brands and the sharpened pitch forks.... I'll go dig out the hangman (retired) from his drinking hole....
TREBOR
14th Jul 2017
4:28pm
.. especially considering the amount of money invested in one of these spots, for so little in return, not even your own full ownership of the property you paid so handsomely for.

In my view, the regulations should be that when you buy, that property is yours - YOU get to sell it, and you get to retain any profit from sale... the only input the management gets is to veto - on solid grounds, anyone undesirable from buying a property.

You don't want rubbish hoarders or cat ladies with ten thousand cats or rolling drunks carousing through the night as your neighbours... or padeophiles or drug addicts/dealers.... or whatever.... say.. a retired politician is verboten (shudders) .... how about a retired psychologically damaged copper with 'the stare' and a hate on everyone? That'd be fun... What about a retired alcoholic lawyer.. running around threatening everyone with law suits all the time.... a house of ill repute now - that could have merit in the right place.....
ex PS
17th Jul 2017
9:43am
I think it is sad that wronged people have to rely on Class Actions to get a fair go. This is what we pay governments to do, if the person in the street can see the inequity of the system, why can't the government?
Or is it that they can, but can't see how taking on one of their campaign contributors can be translated into votes?
This and a lot of other of the problems faced today by consumers is the Right Wing dogma of self regulation, as long as you let business set their own Codes of Conduct and allow them to self audit and regulate you are allowing them to rip their customers off. Where the health and well-being of it's citizens is concerned the government should set the Code of Conduct and administer the audit process. Self regulation only works for the Industry involved, it is an open invitation for them to rip off the clients.
TREBOR
20th Jul 2017
12:30am
Precisely.....
johnp
17th Jul 2017
2:33pm
Must admit I havent read all the posts here. But will ask the question anyway.. Does anyone know the names of the "not for profit" villages ??
TREBOR
20th Jul 2017
12:33am
Not off hand - but a cousin of my ex (for whom I am carer) in South Australia is a 'governor' (unpaid) in a retirement village. The people who buy there OWN the property (subject to rules of good behaviour etc) and can sell it and retain the profits... as long as they don;t sell to low-life etc.

They do pay fees, but the fees are what runs the corporation etc, which is non-profit.
johnp
17th Jul 2017
2:33pm
Must admit I havent read all the posts here. But will ask the question anyway.. Does anyone know the names of the "not for profit" villages ??
Jennie
17th Jul 2017
3:17pm
Johnp: Retirement Villages make their profit from turnover. For a good profit (Key Performance Indicator, KPI for short) 10-11% of residents have to die (I mean move out...) every year. Without this profit there would be no retirement villages.
The day to day running of the village (staff employed, garden, cleaning etc) comes from the monthly levy, which by government legislation is meant to be non-profit making. In other words this budget has to balance. However if expenditure exceeds monies from the levies, then the levies go up which can be greater than CPI.
MacI
19th Jul 2017
7:07am
I've scanned the commentary and found only one contribution from someone who identified themselves as a Retirement Village resident. I'd be interested to hear from some of the supposed 98% highly satisfied residents. Did they do due-diligence about the financial implications and make a lifestyle choice with eyes wide open?

I recently helped my brother-in-law through the decision making process. We visited a number of Retirement Villages in our area as well as freehold options. We carefully examined the various financial models offered by the Villages. I did up a spreadsheet for him comparing the various Village options with a freehold option so that he was very clear about the financial implications of the Village option. In the end he was prepared to exchange the financial downside of the Village option for the lifestyle and security it offered. He is single with no children to leave an inheritance so why not spend his money on community living that offers all sorts of social and hobby and sports activities, physical security, and no maintenance worries. Also, he is young - 62 - if you are going to enter a Village then the younger the better as the financial downside is mostly realised in the first 3 to 7 year (dependent own the financial model).

What we found was that the Aveo financial model was the worst of all by a long shot. The Deferred Management Fees (a percentage of the purchase price) would be fully realised within 3 years and there was no participation in any Capital Gain when the property is sold. The Village that he chose presented a 2 hour seminar where they meticulously went through the financial details with various examples (that I verified independently) and were very clear that the Retirement Village option was a lifestyle choice.

From my observations many people are happy living in a Retirement Village enjoying a community lifestyle and they made the choice with their eyes wide open. Not everyone who advocates for a Retirement Village lifestyle is a sycophant for the Village management as characterised by some.

In no way am I an advocate for Aveo. Their behaviour is disgraceful but I don't think all Retirement Villages should be tarred with the same brush. Some do function ethically and honestly albeit it is an expensive exchange of finances for lifestyle but a legitimate and reasonable choice for retirees who can afford it.
TREBOR
20th Jul 2017
12:34am
Well said.
johnp
19th Jul 2017
11:07am
I just read the posts from Jennie and Macl. Good comments particularly from Macl. Can I make a suggestion for this discussion ?

- Does anyone know a website that compares retirement villages ?
- If not how do we go about creating one ?
- Or does anyone have suggestion as where to go to - to advance this idea ?

- If there is a website
- Does that site compare the entry, initial, ongoing and exit costs ?
- and of course all the facilities therein


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