In early August 2016 Sydney law firm Levitt Robison held a meeting at an Aveo retirement village in Melbourne following an advertising campaign seeking retirement village residents interested in legal action against any individual operator.
12 months later to the day Peter Levitt held a press conference in Brisbane announcing a formal commencement of a class-action against Aveo.
Here is the background of the class action as we have been informed. Aveo has supplied much of this information.
Lead Applicant: The Estate of the late Robert Colin Luke, represented by his son Michael and daughter Meredith as Executors. Mr Luke bought a freehold unit at Aveo Peregian Springs village in 2003 for $270k.
His daughter as attorney signed an Entitlement Assessment in late 2014 agreeing to a sale at $379k which was achieved by Aveo buying the unit with the vendor’s agreement and leasing it to the incoming purchaser under an Aveo Way contract (leasehold to the purchaser) for an ingoing contribution of $379k.
After the deduction of a DMF of 30% of the sale price and other charges agreed with the vendor’s attorney/estate, the estate was returned $219k.
All deductions appear to be in accordance with the resident’s agreement and there appears to be nothing unusual about this transaction. MinterEllison acted for Aveo.
Aveo paid stamp duty on the transfer of the freehold. In summary this would appear to be a standard sale and purchase and conversion arrangement under the introduction of an Aveo Way contract on which Aveo was advised by MinterEllison.
Claim (common cause required for Class Action): Alleged misleading and deceptive conduct by Aveo through contracts with complicated terms and conditions which allow Aveo to convert a freehold unit to leasehold, which devalues the unit to the detriment of the outgoing resident.
Additional claims: that the value of the unit is lessened when it can’t be left to an estate; by restricting the age of entry to over 65s (when the legislation is over 55s) Aveo’s contracts and restrictions are designed to realise the exit fees sooner.
Motivation of lead applicants: The Luke family state they seek regulatory change to ensure other Australian seniors don’t go through this experience when leaving a village to go into aged care.
Funder: Galactic Aveo LLC: assumed holding company for the purposes of funding the class action.
Generally: 100 interested parties have registered through the Levitt Robinson online portal (Vs 400 quoted earlier by Levitt Robinson); only “a few” of the 100 have actually signed up.
Lodgement was said to be timed at the end of next week in the Federal Court in Melbourne.
When asked about the value of the claim by the Australian Financial Review, Levitt responded with $150k per applicant. Levitt is reported to have said he felt this would be bigger than the “Bushfire Case” he just won, which settled out of court for $500m.
Aveo has briefed Arnold Bloch Leibler lawyer Leon Zwier and released the following statement to the ASX:
“Aveo Group (ASX: AOG) is aware that a media briefing was held today regarding an imminent matter that a law firm is reportedly planning to bring against the Group. Aveo Group has never been contacted by this law firm and was not privy, nor has it been advised of the claims made at the media briefing.
Aveo CEO Geoff Grady said: “We have and always will act with the best interests of our residents first and foremost in our minds and actions. We vigorously deny any suggestion to the contrary. Aveo will strenuously defend the matter and we are confident that we can show that we have at all times met our statutory and other obligations and our commitment to residents.”
