Hundreds sign up for Aveo class action

Hundreds of former Aveo residents have signed up for two separate class actions against the retirement village giant following a media investigation that uncovered a series of questionable business practices at the company.

Lawyers for Levitt Robinson are charging ahead with a class action they estimate at $30 million after securing a litigation funder and lodging formal paperwork in the Federal Court last month.

At the same time, Maurice Blackburn is investigating a no-win no-fee action on behalf of residents.

The actions follows a joint Fairfax Media and Four Corners investigation which found that Aveo was engaging in practices that included churning residents, fee gouging, misleading marketing promises, such as safety and emergency services.

The Levitt Robertson class action is open to anyone who terminated an Aveo contract after 2015 and specifically focuses on the company's strategy to change freehold titles to leasehold, named the Aveo Way.

It is being alleged that freehold unit owners' rights as members of strata title villages and the value of their property interests, have suffered as a result of the Aveo Way.

Maurice Blackburn is open to anyone who terminated an Aveo contract after 2013. It focuses on unfair contract terms, including high exit fees and maintenance costs.

Professor Murray Gillin is one of 200 retirees who have signed up for the Levitt Robinson claim.

Professor Gillin, who lectured in entrepreneurship and innovation at Swinburne University, told Fairfax Media his decision to sell his townhouse and move into a retirement village at Sackville Grange in Melbourne's blue ribbon suburb of Kew, ultimately cost him hundreds of thousands of dollars in exit fees, forgone capital gains and other fees including maintenance fees.

He bought the freehold property in March 2010 for $850,000 and walked away after six years with $669,076, after the various fees were deducted.

In contrast, a similar property in the next street resulted in a 25.6 per cent capital gain. "I think the income incentive of Aveo overrides the care factor," he said.

"The company loves to pontificate how they care but they use techniques through marketing that exploit the elderly."

Professor Gillin said during his time at Aveo Sackville Grange he came into contact with some resident's at Aveo's Veronica Gardens retirement village, who were unhappy with Aveo's strategy to buy freehold units and convert villages to leasehold, alleging Aveo was acquiring the freehold rights at virtually no cost.

Retired diplomat John Lander - who was Australia's first ambassador to Iran after the hostage crisis in 1974 - and who lived in the Veronica Gardens retirement village has previously described buying into an Aveo village as a "get poor quick scheme" and a process of impoverishment of the occupant."

After leaving Aveo, Professor Gillin and his wife Loris moved to Queensland, where they are living in a complex that has no exit fees and the weekly maintenance fees are far lower than they were paying at Aveo. He says they when sell they won't need to use an Aveo real estate agent.

When he sold his unit at Sackville Grange he paid Aveo a fee of 3 per cent, which he says was above the going rate.

"We have the same facilities that we had at the village but there are no financial traps," he said.

Maurice Blackburn principal Brooke Dellavedova said the class action she was looking at was different to the Levitt Robinson claim and former residents or their family members could sign up for both.

"We're looking at terms of those contracts that we say may be unfair and come into play when the contract was terminated," she said.

"We're looking at exorbitant exit fees, terms relating to capital gains and losses and expensive maintenance fees. They are really terms that bite when the resident terminates the contract," she said.

Ms Dellavedova said Aveo's exit fees of up to 40 per cent higher were "substantially more" than what other providers are charging.

"It makes it very difficult for people to re-enter the property market or another village if that's what they want to do," Ms Dellavedova said.

Aveo filed its defence to the Levitt Robertson action on Friday afternoon following an inquiry from Fairfax Media.

A spokesman for the company said: "Aveo denies that the introduction of the Aveo Way programme to units previously held as freehold units has caused loss to those residents looking to sell their freehold units, and denies that it failed to disclose any relevant information about the effects of the Aveo Way programme on those units."

Levitt Robinson senior partner Stewart Levitt said Aveo's changes to management contracts had depressed resale values across Aveo villages.

"We are seeking compensation for owners and former owners, representing the difference in value of what they should have received and what they did receive, if they have sold their dwellings since early 2015," he said.

"The class action also seeks the return of sales commissions which Aveo has been charging residents to sell their units to themselves. Aveo is not alone in taking advantage of elderly people at a very vulnerable stage in their lives."

This story Hundreds sign up for Aveo class action first appeared on The Sydney Morning Herald.