The retirement living sector will be relieved after law firm Levitt Robinson today withdrew the class action proceedings against Aveo Group, one of the country’s largest retirement village operators.
The class action claimed in essence that Aveo was underhanded in its introduction of a new contract, marketed as the Aveo Way, particularly with Aveo strata contract residents.
“Levitt Robinson acknowledges that the introduction and implementation by Aveo and its related entities of Aveo Way contracts were lawful, in accordance with industry standards and that we are now satisfied that the Federal Court is not likely to find that its introduction has caused current or former residents of Aveo to suffer any loss,” Levitt Robinson said in a statement.
“We express regret for any distress or anxiety which Aveo residents and staff have experienced as a result of or incidental to the Aveo class action litigation.”
While both parties have agreed that the introduction of the Aveo Way contract was lawful and in accordance with industry standards, Aveo has agreed to pay $11 million in full and final settlement to bring this matter to a conclusion after six years of needless legal action, said Aveo, whose CEO is Tony Randello (pictured).
“This settlement is without admission of liability by Aveo and remains subject to Court approval,” the retirement village operator added.
Two days of hearings into the class action were held in Melbourne last week. It had been scheduled to run for five weeks.
The class action had been billed as Australia’s largest class action against a retirement village operator and came at the same time as a joint investigation from 2017 between The Sydney Morning Herald and The Age and ABC’s Four Corners, which claimed Aveo was engaging in practices that included churning residents, fee gouging, and misleading marketing promises.
The media attack hit all village sales by up to 30% for three years. The sector lost over $3 billion in value as a result. The ASX-listed Aveo was hardest hit, resulting in it being bought by Canadian investment giant Brookfield Asset Management, who attracted Randello from the leadership of Lendlease Retirement to resurrect the group.
Aveo has always defended its actions and contracts, arguing that residents have not received less money for their property by selling them through the Aveo Way program. The Levitt Robinson public statement released today vindicates Aveo’s claims.
The rapid closure of the court hearing indicates that the strength of the Levitt Robinson case is likely to have been weak. The sector will collectively be relieved it was not dragged through a public hearing.
The class action was financed by United States-based firm Galactia Litigation Partners. At a hearing in November last year, the Federal Court was told 6,200 people were covered by the class action, but 2,372 of these members had pulled out of the case.
Levitt Robinson staged multiple advertising campaigns across capital city radio and newspapers, as recently as January, to drum up residents to participate.
You can read the Levitt Robinson Public Statement HERE.
