Summerset made to repay $37,000 for breaching Retirement Villages Act

The case involved a man who had been in the dementia care suite.

The family of a Summerset Dementia Care resident have been awarded over $37,000 for breaches under the Retirement Villages Act 2003. Names have been changed at the request of the family.

When Isla Williamson, a sharp and active 80-year-old, drove herself to lunch with friends in February 2022, there was an overwhelming feeling she should change direction.

Driven by frustration, her steering wheel instead turned towards the local Summerset retirement village and the dementia care suite where husband Oscar had been a resident.

Three months earlier he was moved out of his private suite, into a district health board facility for those with high needs. His condition had deteriorated at Summerset. The family were constantly worried about his lack of supervision and the lack of activities to keep him stimulated.

Just before Christmas 2021, Oscar died.

That day in February 2022, Isla wanted to see with her own eyes if her husband’s unit was still empty. Summerset’s behaviour had raised suspicion. As her car pulled into the usual parking area, shock washed over her. She could clearly see another resident in his room.

Through the grief, the Williamson family were struggling to get any information on the repayment of the licence fee for his unit. They’d paid a lump sum of $405,000 for Oscar to live at Summerset and phoned each month to ask about progress with a sale. When no one was available to discuss the matter and calls were never returned, they started to feel rebuffed.

It turned out the memory care suite was reoccupied within a few weeks of Oscar vacating in October. Summerset had been rumbled. Yet in February 2022 after Isla’s detective work, they would still only admit “an application for the unit had been received”, not that it had been actioned months earlier and the new resident installed.

Summerset had delayed the return of hundreds of thousands of dollars.

And the penalty for late payment? The Disputes Panel awarded interest at the six-month term deposit rate plus 0.15%. That’s got to be the cheapest funding ever secured by a retirement village. It’s also a stunning loophole, given any resident making a late payment to Summerset is required to pay the bank overdraft rate plus 3%.

The financial wizardry and double-dipping began to unravel.

The time had come to calculate the exit fee (known as the Deferred Management Fee). Oscar’s occupation was short and didn’t trigger the maximum fee of 25%. But the calculation method did surprise the family. Summerset deducted an inflated-looking sum of $45,548.

The contract was only in place for 136 days, but another 3 months were added, puffing up the fee by thousands of dollars.

Summerset’s Statutory Supervisor ordered the reversal of this.

Later that year when the case reached the Retirement Villages Act Disputes Panel, they would hear that Summerset felt it was theoretically possible to charge more than one person at the same time (in respect of the Deferred Management Fee). At the hearing, Summerset insisted they reversed the additional 90 days as a “concession”.

They failed to notify the family someone new was in Oscar’s suite and failed to inform them of their right to issue a Dispute Notice. Both breaches were an “administrative error” in their view.

The Disputes Panel begged to differ and referred to Summerset as “evasive” and having “a deliberate strategy to withhold details”.

The crux of the emotion

There is far more to this case than the spin of wordsmiths and financial calculations.

At the heart of it, we have a family deeply disturbed with the lack of supervision and mental stimulation provided by a specialist dementia facility within a retirement village. They felt they should not be paying the Deferred Management Fee at all.

Oscar had walked into the facility in June 2021 as a man who could dress himself with style, eat his meals with other residents and chat about his farming days. He was still physically capable, but had Lewy Body Dementia (recently the Hollywood actor Bruce Willis had the same diagnosis). His safety, supervision and stimulation were a priority for the family.

Without going into the detail of personal incidents suffered by Oscar, the findings of the Disputes Panel make it clear.

“We accept Mrs Williamson’s evidence that Mr Williamson deteriorated visibly and significantly during his time at the Summerset memory care suite and that he improved markedly whilst in the subsequent care of the [district health board] hospital.”

In another excerpt “this argument fails to account for the frequency and length of the periods when Mr Williamson was unsupervised.”

And, “we accept Mrs Williamson’s evidence that Summerset did not provide the anticipated level of care facilities and processes that were represented to be available”.

After the grief of placing a husband, father and grandfather into dementia care and dealing with his death, the Williamson’s had a long and emotional financial challenge on their hands. Part of Oscar’s legacy must be that others know their rights.

Behind every dollar value is a family. A family which in this case have been put in a “frustrating, demeaning and time-consuming” position according to the Disputes Panel.

The order for Summerset to pay $37,892 was made by the Retirement Villages Act Disputes Panel in January 2023 and comes on top of a previous fee reduction awarded by Summerset’s statutory supervisor. This is a full refund of the fee charged when a unit is vacated. Legal fees and interest were also awarded. One of the five claims in this case will be appealed by Summerset in the district court in June 2023. It will not impact the financial settlement.