Accommodation Bonds - Law Institute of Victoria Submission

Accommodation Bonds under the Aged Care Act 1997 - 9th January 2009

Summary: The Law Institute of Victoria (LIV) proposes the following:

* That extensive education be provided to the community regarding aged care services and residents' rights and responsibilities when considering moving into residential care with particular emphasis on financial arrangements including accommodation bonds.

* That the Act be amended to require providers to recommend to prospective residents (or their representatives) that they obtain independent legal advice prior to agreeing to pay a bond.

* That the Act ensures adequate protections for residents in circumstances where, even if aware of their rights, residents are unwilling to exercise them, for example, the right to negotiate bond amounts. This could be due to fear of being turned away from aged care accommodation in a situation where Australia's population is rapidly ageing and there is an undersupply of such accommodation.

* That providers be required under legislation to disclose all relevant information regarding accommodation bonds, including the maximum amount of bond a resident may be asked to pay and a resident's right to negotiate their bond, to empower residents to make informed choices.

* That the Act clarifies contractual issues in relation to accommodation bonds. In particular:

(a) Where no enforceable agreement (whether written or oral) is entered into regarding payment of a bond prior to the resident's entry into residential care, there is no liability for the resident to pay any bond. This point should be made clear in the Act and followed by the Scheme; and

(b) That the Act be amended to provide that if an "accommodation bond agreement" is not entered into before or within 21 days after entry, there is no liability for the resident to pay any bond, that is, that no bond is payable where the provider has failed to comply with section 57-2(1)(e).

In situations where a common law contract existed, it is arguable that the common law contract has been varied due to the provider's failure to fulfil its statutory obligations and, therefore, there is no valid contract. In that event, there would be no requirement for the resident to pay any bond. * That the Act clarifies the consequences for providers who fail to comply with other accommodation bond obligations under the Act.

Currently, the Department does not necessarily act upon failures by providers to comply with these obligations or compel providers to pay refunds to residents.

On this basis, the LIV proposes an amendment to the Act that states that if the provider does not comply with the bond rules, it is not permitted to charge a bond.

* That the Act be amended to enable the Scheme to deal with minor non-compliance issues by providers, for example, situations where there are no serious consequences and which did not result from bad faith.

* That the Scheme determines financial disputes not only by reference to whether the type and amount of the payment in question comes within the scope of the Act, but also considers all facts relevant to the complaint such as whether there was any contractual obligation to make the payment in question or any misrepresentation.

* That interest rates a provider is permitted to charge a resident if the bond is not paid in full on the day of entry be lowered to the equivalent of the commercial rate.

* That the Act be amended so that where the net value of a resident's assets when realised is less than their value or estimated value at the time of entry, the provider is required to reduce the bond to an amount that would leave the resident with at least the relevant minimum permissible asset value.

Download the submission (PDF, 250kb)

Queries regarding this submission should be directed to:

Contact: Téa Paris
Legal Policy & Practice
Law Institute of Victoria

Phone: (03) 9607 9489

Accommodation Bonds - Law Institute of Victoria (LIV) Submission