There are 2 limited legal pathways for operators to terminate a residence contract and make a non-owner resident leave a retirement village:
- termination for a substantial breach of contract
- termination for health and safety reasons.
Both of these processes require a defined multi-step process with significant protections at every stage.
Owner-residents cannot be forced to leave their premises as their right to occupy is an ownership right, not a contractual licence.
Termination for a substantial breach of your contract
The operator can only use this pathway if the breach is a substantial breach. The law defines a substantial breach as one of the following:
- a resident has intentionally or recklessly caused serious damage to any part of the village, including common areas or facilities
- a resident has posed a serious threat to the life, health, safety or welfare of another resident, the operator, or any employee or contractor of the operator
- a resident has committed persistent breaches of the contract that, in the circumstances, justify termination.
An ordinary or minor breach of contract is not a substantial breach and cannot lead to termination.
Step 1: The breach notice
Before any termination can happen, the operator must serve a breach notice on the resident. The notice must be in the prescribed form and must:
- specify the breach
- state that it is served under section 16C of the Act
- set out the effect of the breach and termination process on the resident
- if the breach can be remedied, specify what the resident must do to remedy it
- if the breach cannot be remedied, require the resident to stop committing it within 28 days of service.
Residents can write to the operator and request a further 28-day extension.
Residents may be able to challenge at VCAT a notice that does not comply with these formal requirements.
If a resident disagrees, they can apply to VCAT for orders to stop further termination action. Residents do not need to wait for a termination notice (see step 2 below) to seek VCAT orders.
Step 2: The termination notice
The operator can only serve a termination notice if all three of the following are true:
- a breach notice was served on the resident
- the breach was a substantial breach that the resident has not remedied or ceased as far as practicable
- the resident did not comply with the breach notice within the required time.
The termination notice must give the resident at least 60 days to leave the village.
If a resident disagrees with a termination notice, they can apply to VCAT for orders to stop the termination.
The operator must act reasonably and proportionately
Before serving a termination notice for breach, the operator must be satisfied that it is reasonable and proportionate in all the circumstances. The law requires the operator to consider:
- the retirement village principles, which include that a resident's preference to remain in the village should be respected and that all residents should be treated with dignity and respect
- the effect the notice will have on the resident’s health, safety or wellbeing
- whether any other course of action is reasonably available before resorting to termination
- the risk to other residents, the operator, employees or contractors, visitors, or any other person lawfully on the premises if the contract is not terminated
- the financial impact on the resident
- the impact on other residents in the village
- whether the resident is reasonably able to stop committing the breach
- whether the operator has taken, or is capable of taking, reasonable steps to mitigate the effects of the breach
- the resident’s ability to advocate for themself, including through a legal representative.
Path 2: Termination for health and safety reasons
This is a separate and more limited pathway. The operator can apply to terminate a contract on health and safety grounds with VCAT’s approval, and only if VCAT is satisfied that:
- the resident has care needs that cannot be met in the village by the operator, an approved aged care home care provider, or an NDIS provider, and
- the resident would pose a substantial risk to the health and safety of any person, including themself, if they were to remain in the village.
Both conditions must be satisfied. The operator cannot use this pathway simply because a resident needs a higher level of care.
VCAT must approve the termination
The operator cannot terminate a contract for health and safety reasons without first obtaining approval from VCAT. This is a mandatory legal requirement.
The operator must apply to VCAT, setting out the grounds for termination. Within 10 business days of making the application, the operator must serve a copy on the resident, their emergency contact person, their spouse or domestic partner, and any person permitted by the operator to live in the village with the resident.
Residents have the right to participate in the VCAT proceeding and to be represented.
After VCAT approves: the operator's proportionality obligation
Receiving VCAT approval does not mean the operator can automatically serve a termination notice.
The operator must still be satisfied, before serving the notice, that doing so is reasonable and proportionate in all the circumstances. The proportionality factors they must consider include the effect on the resident’s health, safety or wellbeing, whether other courses of action remain available, the financial impact on the resident, and the resident’s ability to advocate for themself.
The termination notice
Once VCAT has approved and the operator is satisfied the notice is reasonable and proportionate, the operator may serve a notice requiring a resident to leave the village.
The notice must state that it is issued under section 16H of the Retirement Villages Act 1986 and the date by which the resident must vacate. That date cannot be earlier than the date of service of the notice or earlier than any date recommended by VCAT.
What happens when a resident leaves under a termination notice
When a resident permanently vacates after being served with a termination notice, all of their retirement village contracts are terminated.
If the resident is entitled to an exit entitlement, they become immediately entitled to receive it.
Get advice before you respond to any notice
Receiving a breach notice or termination notice is serious. Residents should seek independent legal advice before responding. For information on where to get advice and assistance, go to organisations that can help retirement village residents.