The statutory supervisor: An independent watchdog
Residents of retirement villages are given significant protection by the requirement in the Retirement Villages Act that the operator of each village must appoint a 'statutory supervisor' for the village (unless the village is exempted).
The statutory supervisor is an independent professional organisation or person that has been approved by the Registrar of Retirement Villages (or existing ones approved by the Securities Commission). They are appointed under a 'deed of supervision' that sets out the terms and conditions of their role. The deed of supervision must be registered, and a copy must be made available to residents or intending residents.
What is the statutory supervisor's role?
The statutory supervisor is responsible for monitoring the village's financial position, the security interests of the residents, and the management of the village. The supervisor intervenes on the residents' behalf where necessary.
Specifically, the statutory supervisor:
- monitors the village's financial position
- reports to the Registrar and to the residents each year at the annual general meeting
- attends other meetings when requested by residents
- acts as an independent stakeholder for all deposits and progress payments paid by residents to operators (with specific roles when a resident enters or leaves a village, or avoids (cancels) their agreement)
- receives complaints about breaches of the Code of Residents' Rights
- represents the residents' interests if the village gets into serious financial difficulty.
What the operator must tell the statutory supervisor
The operator must tell the statutory supervisor about certain things, and the supervisor can then direct the operator to inform residents and intending residents about these things. These include:
- any proposal to develop or redevelop a part of the village
- any suspension of the village's registration or any request by the operator to the Registrar to cancel the village's registration
- any appointment of a new statutory supervisor, or a decision by the Registrar to exempt the operator from having a supervisor for the village
- any proposed increase in secured liabilities or in the maximum amount available to the operator under a credit facility
- any actual or threatened action by a creditor, mortgagee or charge-holder for money over $1,000, and any action to put the operator or village in receivership or liquidation
- any actual or threatened legal proceedings against the village or operator that affect the interests of any resident
- any decision by an insurer to refuse to insure the village or part of it.
The operator must also inform the statutory supervisor about disputes that might affect a significant number of residents, the general operation of the village, or the operator's rights and obligations under the deed of supervision.
What powers does the statutory supervisor have?
As the watchdog for the village, the statutory supervisor can require the operator to provide information about the village's finances, the security of the residents' interests, or how the village is being managed.
A statutory supervisor who is concerned about any of these areas can:
- direct the operator to give particular information to all the residents
- direct the village to be operated in a particular way
- apply to the court for it to make certain orders under the Securities Act 1978
- prevent an advertisement from being published or distributed to the public if it's inconsistent with the Act, regulations, disclosure statement, occupation right agreement or Code of Practice
- issue public statements about the village (with the authorisation of the Registrar of Retirement Villages).
Statutory supervisors can also be given additional powers and duties by the operator (these will be in the deed of supervision).
Applications for exemptions
Operators can apply to the Registrar of Retirement Villages for a village to be exempted from the requirement to appoint a statutory supervisor.
These are the criteria on which an exemption can be made (they are set out in the Retirement Villages (General) Regulations):
Criteria that apply to existing villages
- that there are no current or foreseeable risks to the residents' interests
- that the operator has notified the residents of the application for an exemption and whether any residents have informed the Registrar of any such risks
- the nature and extent of the residents' control of the management of the village
Criteria that apply to villages not yet operating
- that the intended manner of establishing and operating the village will not create any reasonably foreseeable risk to the residents' interests.
Criteria that apply to all villages
- that the residents' interests are not at risk from any debt or other financial liability incurred by the village or operator in favour of another person
- that for any other reason it's undesirable to appoint a statutory supervisor because the residents' interests would or might be negatively affected without an equivalent or greater benefit.
Page last updated: April 2007