How Metlifecare is ignoring the Commerce Commission’s warnings

Metlifecare, one of the biggest retirement village operators in Aotearoa, is at the centre of the request after residents alerted the Retirement Village Residents Association (RVResidents) to the operator’s conduct.

In August 2024, Auckland’s Greenwich Gardens Village, which is owned and operated by Metlifecare, notified residents they would be charged for the maintenance and repair of chattels in their units. This decree ignores the fact the residents don’t own the units and have never been charged for maintenance before. The charges apply to any residents who signed Occupation Right Agreements (ORAs) before June 2024. The ORA sets out the residents’ rights and obligations for living in a retirement village.

Metlifecare’s announcement came just months after it received a warning from the Commerce Commission about the terms of its ORA. Following an RVResidents complaint, the Commission wrote to Metlifecare in January 2024, warning the operator that some terms in its ORA could be considered unfair under the Fair Trading Act (FTA). The warning included Metlifecare’s maintenance and repair terms.

Residents are afraid of repercussions

RVResidents has received several complaints from Metlifecare residents about maintenance and repairs.

"In one case, an older woman was charged $562 for a draft strip to close up a gap between her garage door and some uneven concrete outside," said Di Sinclair, RVResidents national vice president and complaints coordinator. Yet, according to Sinclair, under the Retirement Villages Code of Practice 2008, which sets out the obligations operators must meet, Metlifecare would be responsible for fixing the garage door, particularly as it was initially caused by the concrete beyond the woman’s villa.

"The operator must keep the building and equipment in good working order. A garage door, particularly one attached to the unit, is part of that obligation," she said.

The resident fought the charge, and the operator backed down. It said it would pay half and credited her account for $281. The resident reluctantly agreed to pay the sum.

“I just don’t want to get involved in an ongoing formal complaint, which could take months or years to resolve. I will pay the $281 and let that be an end to it. I am too old and tired to fight. I just want a quiet life,” the woman told RVResidents.

RVResidents said the woman shouldn’t have to pay anything, let alone foot half the bill.

“Residents are afraid of repercussions if they ‘make a fuss’, and they often feel they don’t have the emotional or physical strength to get into conflict with village management. The formal complaints process is complicated and well past its use-by date and is one of the main things to be resolved in the ongoing review of the Retirement Villages Act,” Sinclair explained.

Sinclair said residents shouldn’t have to rely on advocates to enforce their rights.

That’s why the organisation is calling on the Commission to ask the court to declare certain contract terms unfair in retirement village ORAs.

The Commission’s warning

In September 2022, RVResidents filed a complaint to the Commission about a range of terms in Metlifecare’s ORA it thought could breach the FTA. Under the act, it is illegal for standard-form consumer contracts to contain unfair contract terms.

A resident signs an ORA before they move into a retirement village. Living in a village under an ORA isn’t the same as owning a home. Residents generally have no ownership rights and aren’t entitled to any capital gains when their unit is sold.

RVResidents’ complaint alleged that, among other things, Metlifecare relied on an unfair contract term in its May 2022 ORA when it said residents were responsible for the maintenance and repair of a range of chattels owned by the village.

Under the FTA, the courts may declare a term unfair if the term:

• would cause a significant imbalance in the parties 'rights and obligations arising under the contract
• would cause detriment (whether financial or otherwise) to a party if it were enforced or relied on
• is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by it.

On the back of the complaint, the Commission took its time to investigate the issues. It wrote a warning letter to Metlifecare in January 2024.

The Commission said that, when the contract term was considered against residents’ property ownership rights, it might cause a significant power imbalance in favour of the operator.

It said, “This is because the terms of the ORA provide that the resident has no ownership right or interest in the unit and does not share in any capital gain in value of the unit on termination and resale of the occupation right to a new resident.”

If the term were enforced or relied on, the Commission said it would cause financial detriment to residents, and if it wasn’t reasonably necessary to protect Metlifecare’s business interests, it could risk breaching the law.

Though Metlifecare disagreed, it adjusted its ORAs for residents entering its villages from June 2024. Instead of paying for repairs and maintenance directly, residents with ORAs dated from June 2024 would pay fees that could be increased yearly by the village. In return, Metlifecare would bear the responsibility of maintaining and repairing all the chattels in a unit.

Unfortunately, residents who signed an ORA before the change were stuck with contracts that contained the potentially unfair clause, and according to RVResidents, further action by the Commission is the only way to protect those residents.

“The Commission no doubt anticipated that industry behaviour would change following its clear advice to industry about the terms it considered were likely to be fair under the FTA,” Sinclair said. Though some operators had adjusted their terms, widespread change hasn’t happened.

It’s time to take action

Even though it is illegal for standard-form consumer contracts like ORAs to contain unfair contract terms, you don’t have to look hard to find other examples of such terms. Unfortunately, consumers’ arms are effectively tied because, under the FTA, only the Commission can take action against unfair contract terms.

“Only the Commission can bring an unfair contract terms case, and there is no other tool available.

“Retirement village residents are vulnerable and lack any ability to use market forces to discipline operators. Switching retirement villages would involve significant disruption to residents’ lives and is not economically feasible for most residents, even if the incredible disruption could be put to one side,” RVResidents pointed out in their letter to the Commission.

As a result, it’s easy for businesses such as retirement villages to get away with including and enforcing unfair terms in contracts.

Consumer NZ supports RVResidents’ call to action and urges the Commission to hold operators to account.

We’d also like to see the law changed so that anyone can take action against an unfair contract term. We’ll be calling for this change to be made when the Fair Trading Act review is complete.