Court action urged on ‘unfair’ retirement village chattels clauses

Thursday, 27 February 2025

Consumer NZ and the Retirement Village Residents Association want the Commerce Commission to seek a court declaration over ‘chattels’ clauses in some retirement village contracts.

What do you think? Join the conversation in the comments below.

Two consumer advocacy groups have teamed up to ask the Commerce Commission to seek a court declaration over one of the most hated clauses in retirement village contracts.

Consumer NZ and the Retirement Village Residents Association (RVRA) have called on the commission to go to court to get a ruling that chattel repair and maintenance clauses in some retirement village contracts breach unfair contract term laws.

In January last year the commission wrote to retirement villages about clauses which purported to require village residents to pay for repairs and maintenance to chattels like heat pumps, water cylinders, and kitchen appliances.

The commission told the village operators it considered the chattel repair and maintenance clauses were a “possible breach of unfair contract term provisions” because the village, and not the residents, owned the chattels, however it stressed only a court could rule on whether the clauses really were unfair.

The letters, which recommended villages get legal advice about chattels clauses in their occupation right agreements (ORAs) with residents, were sent after complaints from the two consumer groups.

“Despite the commission’s warning, most of Metlifecare occupation right agreements still allow the operator to charge its residents for maintenance and repairs,” Consumer NZ said in a statement.

Metlifecare, which is listed on the NZX sharemarket, responded angrily to the statement.

It said it made changes to the ORAs offered to new residents in January last year, and ORAs signed from June no longer included the chattels repair clause, leaving the company to bear the cost of chattels repair and maintenance.

However, that move came alongside a shift to “unfix” the weekly fees residents would pay under these new ORAs.

Residents living under older ORAs had fixed weekly fees that did not rise regardless of how long a resident stayed in their unit.

Under the new ORAs, weekly fees would rise each year with the Consumer Price Index, and the new fees were set at a level necessary to cover repairs and maintenance of chattels.

Metlifecare said it had not gone back and removed the chattels clauses from ORAs agreed by residents at earlier dates, when weekly fees were set to take into account residents’ responsibility for paying for chattels repair and maintenance.

It said residents who moved into one of its villages before September 2021 still had ORAs under which they were responsible for paying to repair and maintain the chattels owned by the operator. There were transitional ORAs between September 2021 and June 2024 under which residents had to pay the costs of repairing some chattels, but not all.

Metlifecare does not plan to remove the chattels repair clauses from contracts signed by residents before June 2024.

“We do not intend to alter our approach to repair and maintenance charges for historical and transition period ORAs,” Metlifecare said.

Vanessa Horne, the commission’s general manager for competition, fair trading, and credit, said RVRA had laid a new complaint, and the commission would decide whether further action was required.

A survey by RVRA of its members in January indicated it was not only Metlifecare that still retained chattels clauses in some of its ORAs, and Nigel Matthews, chief executive of the RVRA, said some village operators continued to include chattels clauses in new ORAs.

Retirement Villages Association chief executive Michelle Palmer says the industry is progressing reforms through its ‘Blueprint for Improvement’, which includes clearer definitions of chattels, repairs, and maintenance responsibilities.

Michelle Palmer, executive director of the Retirement Villages Association (RVA), which lobbies for the industry, said: “In every sector, businesses structure their pricing and services differently to meet the needs of various customers.

“Policies on chattels vary between operators. Some residents pay repair costs directly, while others contribute through their weekly fees.”

But, she said: “The RVA is open to discussions with the Commerce Commission regarding repairs and maintenance.”

“Responsibility for repairing, replacing and maintaining operator-owned fixtures and chattels should fall on the retirement village,” says Jon Duffy, Consumer NZ chief executive.

Some of the respondents to the RVRA survey indicated the costs of repairs and maintenance could be very high.

“There are unsafe steps at this villa, we have been quoted $1000 for a handle to hold to step out small door in garage, $1500 for two steps down onto the lawn and garden,and $100 for a rubber mat over a raised metal obstruction into the conservatory,” said one.

Nigel Matthews, chief executive of the Retirement Village Residents Association, speaking to MPs in 2022.

Jon Duffy, Consumer NZ chief executive, called the chattel repair clauses “completely unfair”.

“Even though residents don’t own the units, chattels or fixtures, they’re often responsible for the cost of maintenance, repairs and replacement of everything from heat pumps and blinds to light switches and power sockets,” he said.

Commerce Commission deputy chair Anne Callinan told MPs in October that everyone should be able to challenge alleged unfair contract terms in court.

Matthews said in some villages there were residents living under different ORAs, with some obligated to pay for chattel repair and maintenance, and others not.

A court ruling could help determine whether some of those ORAs contained unfair clauses, he said, noting the unfair contract laws came into force in 2015.

Only the commission can challenge a contract term in court under those laws.

The commission told MPs at an October select committee hearing the law should be changed so anyone could take a court challenge over a contract term they felt was unfair.

Deputy chair Anne Callinan suggested that the Fair Trading Act be changed so people could take their own cases to court, instead of having to rely on the commission.

Duffy also called for the law to be changed.

“In the meantime, we want to see the commission give teeth to its warnings and take action to protect residents,” he said.

Comments are moderated during working hours and may not appear immediately.

Correction: In an earlier version of the story, it stated the Commerce Commission recommended retirement villages remove the chattels clauses from their contracts. This has been changed to say the commission recommended villages get legal advice about their chattels clauses.