The statutory supervisor for Kate Sheppard Gardens says it will be looking for ‘wriggle room’ to return to residents more than their contract allows.
Covenant Trustee Services is the statutory supervisor for the 220 residents of the 148 affected units in Kate Sheppard Gardens retirement village, owned by Lance Bunting. It is also the statutory supervisor at neighbouring Kate Sheppard Lifecare, which is owned by a separate company but has 11 affected residents in studio units.
Kate Sheppard Gardens residents were informed by a June 9 letter from Bunting that the loss adjustor’s report of late May – declaring the village a “total constructive loss” – had been accepted by the insurance company and the village was not to be rebuilt.
The village’s insurance company is now understood to be processing a claim for the village. Bunting told residents he should be in a position to pay the amount due under contracts in late June or early July.
“At the same time we will be holding the required meeting for Kate Sheppard residents chaired by the Retirement Villages Association and Covenant Trustee,” he wrote in a letter to residents.
The statutory supervisor’s role is to protect the residents’ financial interests in a village. Supervisors hold a first charge security over a retirement village’s land titles and manage that security to protect the amount contractually owed to residents at any particular point of time.
Peter Orpin, the supervisor for Covenant: “We’ll certainly be doing our very best in their interests to see whether there isn’t ‘wriggle room’ available somewhere to give them more than what the strict wording of their contract says.”
Orpin says options include trying to manage a better pay-out with the insurance company, negotiating with the operator to forego some of the contractual deductions, and making a deal with a government department to support residents. Orpin believes a decision to rebuild on another site could be in residents’ best interests.
Bunting told INsite he was still in negotiations with the insurance company over the amount and type of pay-out.
“We’re hopeful by the end of the month to get a satisfactory settlement with the insurance company and then there will be some options available and we’re exploring some of those options,” said Bunting. “We’re conscious people are stuck and it’s a terrible situation.”
He said options to be explored included rebuilding somewhere else or buying an existing, similar facility and perhaps expanding it: “None of these ideas are definite.”
Bunting pointed out that Kate Sheppard Gardens was a 10-acre site and neighbouring Kate Sheppard Lifecare a further three acres, so it was a “pretty big ask” to find a similar site.
Asked about what his financial situation would be once an insurance payout was made. Bunting replied that he had had a whole business that he previously could have sold as a going concern.
“We’ve definitely lost that opportunity … we’re definitely going to be at a loss in the way things have developed.”
Bunting added that Kate Sheppard was fully compliant with the Retirement Village Act and the RV code, and it was being unable to rebuild on the site which had forced it to trigger paying-out residents’ contracts.
“We’ve been grateful of the support of the RVA and the RVA member villages in Christchurch and nationwide who have offered financial packages to help displaced people from Kate Sheppard.”
John Collyns says by early June the RVA had about a dozen calls from Kate Sheppard residents interested in pursuing the re-housing assistance packages being offered by RVA members.
The RVA member offers differ from village to village but range from discounts on units, loans (some interest-free) through to waiving charges or facility fees.
Collyns says many of the residents inquiring were still unsure how much their payouts would be, with the situation complicated by many having their contracts held in solicitors’ offices in the red-zoned central business district. It is understood that the deductions vary between 20 and 30 per cent depending on which contract residents purchased their unit under over the village’s 15-year history. But the majority are understood to have deductions of 25 per cent.
RVA’s line and action
“The heart of the problem is that the code-compliant contracts that give residents peace of mind in normal circumstances do not give them peace of mind if their village is destroyed and not rebuilt,” said Retirement Villages Association executive director John Collyns.
Following the February quake, the RVA announced re-housing assistance packages for people affected by the closure of Kate Sheppard Gardens. Collyns said it was a tragic situation for everyone, including the owner, but that the most immediate and useful course of action for the RVA to take involved lowering barriers to getting displaced people into new units.
Collyns said various offers of financial accommodation range from discounts on units, to loans which in some cases may be interest-free, through to waiving other charges or the facility fees, to allow residents to move in. The offer from each village will differ according to their circumstances, and the circumstances of the resident.