The capitulation by the class action lawyers Levitt Robinson in its six-year bid to score a speculated $100 million-plus from village operator Aveo Group, claiming dodgy contracts and deals with residents, saved the retirement village sector months and months of shockingly bad media coverage over claimed rip-off contracts.
A class action win could have resulted in more class actions, a winding back of contract options available to residents of retirement villages and ramifications for the price exiting residents could sell at, not to mention the continued undermining of trust in the sector and impact on residents and the village workforce.
All village operators will know the damage caused by the joint investigation in 2017 between The Sydney Morning Herald, The Age and ABC’s Four Corners, which claimed Aveo was engaging in practices that included churning residents, fee gouging, and misleading marketing promises.
‘Bleed them dry until they die’ ruined all village sales by up to 30% for three years. The sector lost over $3 billion in value as a result. ASX-listed Aveo was hardest hit, resulting in it being bought by Canadian investment giant Brookfield Asset Management, who attracted Tony Randello to head Aveo from the leadership of Lendlease Retirement to resurrect the group.
Levitt Robinson has now expressed regret for the distress and anxiety caused to Aveo residents because of the class action.
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.
This settlement is without admission of liability by Aveo and remains subject to Court approval. How much, if anything, of the settlement amount will go to residents is yet to be determined. The class action was brought on a “no win, no fee” basis and was funded by US litigation funder Galactic.
A good outcome for the sector – but one that is not so good for the residents and families who must now move on.