THE LAUREL SPRINGS INVESTIGATION
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THE LAUREL SPRINGS RETIREMENT VILLAGE
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FINANCIAL INVESTIGATION
DETAILS OF FINDINGS
Details of Findings
8.Misused Capital Replacement Fund (CRF) 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

8.Misused Capital Replacement Fund (CRF) 2019-2020

In 2019-2020, the scheme operators misused funds from the Capital Replacement Fund (CRF) to replace a concrete driveway that they had damaged in their role as developers of the extension to the Laurel Springs Retirement Village. Also, they misused funds to install rock walls, an "entry statement", that is not a capital replacement item. These are offences under section 91 of the Retirement Villages Act. Furthermore, the scheme operators encouraged residents to vote for a resolution to accept the Financial Statements at the 2020 AGM.

8.1 Misuse of the Capital Replacement Fund

8.1.1 According to the 2019-2020 Capital Replacement Fund report, $58,504 was used to "replace road Unit 36-38", and $10,573 was used for "entry statement refurbishment":

Evidence Document D6.8 - 01

8.1.2 At the 2020 AGM, the scheme operators encouraged residents to vote to accept the Laurel Springs Financial Statements, which included the CRF report, for Year ended 30 June 2020:

Evidence Document D6.8 - 05

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8.2 The CRF Quantity Surveyor Reports

8.2.1 According to the 2017 CRF Quantity Surveyor Report, the only item related to replacing roads or driveways was the progressive replacement of brick paving. Also, there is no item for "entry statement refurbishment":

Evidence Document D6.8 - 02

8.2.2 According to the 2020 CRF Quantity Surveyor Report, there is an amount of $5,000 for "entry statement refurbishment":

Evidence Document D6.8 - 03

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8.3 The concrete road damaged by scheme operators

8.3.1 In late 2018 and early 2019, the concrete main driveway at the top end of the village was damaged by hundreds of movements of heavily-laden trucks carrying fill material to and from the site of the extension to the Laurel Springs Retirement Village. During the 2018 AGM, in response to questions from a resident who predicted such damage, the residents were assured that any road repairs would be paid for by the scheme operators in their role the developers:

Evidence Document D6.8 - 04

8.3.2 On 20 May 2019, I made a written complaint on behalf of a group of residents, to the Sunshine Coast Council about the road conditions near the site of the village extension:

Evidence Document D6.8 - 06

8.3.3 The road was replaced a few weeks after our complaint, but residents were not told then that the scheme operators had paid for it using the capital Replacement Fund. We had been told, at the 2018 AGM, that the scheme operators would pay for the damage out of their own construction budget, and were not told otherwise until we received the Financial Statements for Year ended 30 June 2020.

8.3.4 The 2017 CRF Quantity Surveyor Report does not forecast any need to replace the concrete road/driveway. This infers that the replacement was not due to any significant deterioration caused by normal vehicle traffic.

8.3.5 The damage was caused by the operational works associated with the village extension, so funding of the replacement is therefore is the responsibility of the scheme operators in their role as developers.

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8.4 The "Entry Statement"

8.4.1 The 2020 CRF Quantity Surveyor Report includes $5,000 for the "entry statement refurbishment", whereas the 2017 report does not list any such item. It can therefore be inferred that this is not actually replacement of an existing capital item.

8.4.2 The scheme operators have offered no explanation for the discrepancy between the forecast $5,000 cost, and the actual $10,573 spent.

8.4.3 The original "Laurel Springs" sign at the entry to the village was a simple timber engraved board; it was decayed and needed to be replaced. Replacement with a new similar sign could have reasonably been funded by the CRF. The new "Entry Statement" is a pair of rock walls, with an acrylic sign attached to the front, with the words "Laurel Springs Retirement Resort" in white lettering on a clear background.

8.4.4 The new "Entry Statement" is a Capital Improvement Item (legally, not artistically), intended to promote the village to potential buyers, and funding is therefore the responsibility of the scheme operators.

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8.5 Contravention of Retirement Villages Act

8.5.1 The scheme operators have paid for the replacement concrete road with money from the CRF, instead of paying for it themselves, despite being responsible for the damage.

8.5.2 The scheme operators have paid for the new "Entry Statement" with money from the CRF, instead of paying for it themselves, despite it being a capital improvement item for which they are responsible.

8.5.3 The scheme operators have therefore contravened s91 of the Retirement Villages Act:

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