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FINANCIAL INVESTIGATION
DETAILS OF FINDINGS
Details of Findings
5. Unlawfully increased General Services budget 2019-2020
18. Defrauded residents who bought new unit - structure unfit for purpose, and unconscionable exit terms
19. Deceived residents - renaming of Village to Resort

5. Unlawfully increased General Services budget 2019-2020

The scheme operators unjustifiably and unlawfully increased the General Services budget by 31% in 2019-2020, including a 46% increase in the manager's salary; this is an offence under section 102A of the Retirement Villages Act. Also, they gave false and misleading answers to questions about it; this is an offence under section 86 of the Retirement Villages Act. Furthermore, the scheme operators encouraged residents to vote for a resolution to accept the unlawfully increased budgets at the 2019 AGM.

5.1 Increases in General Services budget 2019-2020

5.1.1 The scheme operators increased the cost of many items in the 2019-2020 budget by amounts that are unjustifiable and cannot be lawfully explained:

Evidence Document D6.5 - 01

5.1.2 I checked the calculation of the increases in all of the items in the 2019-2020 budget, using Microsoft Excel, and confirmed the figures given in the budget document provided by the scheme operators:

Evidence Document D6.5 - 05

5.1.3 At the 2019 AGM, the scheme operators encouraged residents to vote for the gross increases in budget estimates, despite knowing that the increases were unjustifiable and unlawful, and failed to allow anyone to speak against the motion:

Evidence Document D6.5 - 03

5.1.4 According to s103(3) of the Retirement Villages Act:

5.1.5 At a time of very low inflation, with CPI increasing at about 1.7%, budget increases of the magnitude shown above cannot be justified and are unreasonable. The scheme operators have therefore breached s103(3) of the Retirement Villages Act.

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5.2 Response to questions

5.2.1 On 7 November 2019, in response to my request for answers to questions about the budget increases, I received the following email from the village manager:

Evidence Document D6.5 - 02

5.2.2 Attached to the email from the village manager, referred to in 5.2.1 above, was a copy of my questions with the answers typed in green:

Evidence Document D6.5 - 03

5.2.3 The answers to my questions were deliberately evasive and, in some cases, knowingly misleading or false:

1. The scheme operators have provided no evidence to support their claims about the gross increases in the cost of goods and services that form the General Services budget.

2. The claim that the 46% increase in the Wages and Salaries was "as per Award and signed employment contact" is false. Firstly, the scheme operators have provided no evidence that the employment contract for the manager is under any industrial award. Secondly, the Fair Work Commission would not impose a 46% increase in the wages or salary, of anyone on any award, in the current economic climate.

The Retirement Villages Act prohibits misleading or deceptive conduct:

5.2.4 I note that, in the email referred to in 5.2.1 above, the manager says:

We would also like to bring your attention s136 (2b)

According to the Retirement Villages Act:

The manager, on behalf of the scheme operators, therefore accused me of harassing or intimidating them because I asked questions about the increases in the 2019-2020 General Services budget.

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