Springfield City Group takes Aveo Retirement Homes to Supreme Court

The mega developers behind Australia’s largest masterplanned city, southwest of Brisbane, are taking a major retirement living provider to court over predicted delays on a $1 billion seniors project.

The mega developers behind Australia’s largest master planned city are taking a major aged care contractor to court over project delays that both parties believe could cost them upwards of $1 million.

Springfield City Group is taking retirement living provider Aveo Group to court over a predicted failure to meet development targets for a $1 billion seniors project.

The dispute came before the Brisbane Supreme Court last week for a decision regarding an interlocutory injunction, requested by Springfield City Group.

The injunction would restrain Aveo from engaging with an expert decision process regarding the dispute until the matter is settled fully in court.

The dispute relates to an ongoing retirement living project, in which Springfield City Group contracted Aveo to develop at least 2500 aged care or retirement village units, referred to as “seniors products”, between 2015 and 2030.

Aveo announced plans for the $1 billion development back in 2016, claiming the project would form “Australia‘s largest intergenerational retirement village”.

Aveo Springfield's Grand Opening event in 2017.

Court documents revealed that Aveo initially agreed to a development deed for the project which stated they would proceed in accordance with a rolling business plan.

Aveo would then update on each anniversary of the project start date.

The main dispute between the parties surrounded two updated business plans that Aveo provided in March and November last year.

Springfield City Group chose not to approve either of the business plans.

Instead, it submitted that the plans were “materially inconsistent” with the agreed requirements of the business plan.

They claimed Aveo’s updated plans made it unlikely they could successfully develop at least 2500 seniors products, as they had originally agreed upon.

Aveo’s new plan stated that they would complete only 562 seniors products by, 2027.

Court documents said this would leave 87 per cent of the product completion to the last five years of the anticipated 15-year development period.

Springfield City Group also noted that one clause in the agreement would allow Aveo to terminate the development deed in on October 1, 2025 if the number of completed products was less than 720.

The developer suggested that Aveo was planning to make this way of termination a possibility.

They further noted Aveo’s updated business plan failed to include a proposed subdivision of a key development site into staged lots, as was required of them.

Two new buildings unveiled at the Aveo Springfield retirement community.

After receiving the non-approval notices from Springfield City Group, Aveo informed them in turn that they would be disputing the matter and referring it to the Resolution Institute.

An expert was then appointed to determine the dispute.

The court documents said Aveo was entitled to refer the dispute to an expert, according to their original agreement.

But that was unless, as Springfield City Group contends, the updated business plan submissions did not actually qualify as business plans in accordance with the agreed development deed.

The judge presiding over the injunction hearing, Justice Thomas Bradley, stated in his reasons that in his view there might be enough potential inconsistency in Aveo’s documents for them to not qualify as a business plan.

However, Justice Bradley was solely presiding over the injunction request and not the claim itself.

Springfield City Group submitted that the expert process would cost them between $570,000 and $1 million.

Aveo responded with what Justice Bradley noted was “hearsay evidence”.

Aveo claimed it was currently incurring about $1 million in annual holding costs for each of the 96 completed seniors products they had yet to sell.

The $1 billion Aveo Springfield community

In addition, Aveo submitted that they were incurring a further $2.8 million in annual interest costs for debt funding associated with the construction of the seniors products.

It could not reduce those costs without approval of the two business plan submissions in contention.

Aveo also argued that if an interlocutory injunction were granted, they would be “unable to meaningfully progress development” of a 123-bed residential aged care facility that had been scheduled for completion in 2024.

Springfield City Group offered an undertaking that would allow Aveo to reduce costs without the business plan’s approval. It offered to facilitate progress on the aged care facility in the meantime.

Justice Bradley was satisfied that Springfield City Group’s undertakings successfully lessened impacts upon Aveo.

He granted the interlocutory injunction, restraining Aveo from taking any further steps in the expert process until Springfield City Group’s claim was settled.

The matter was adjourned for review no earlier than July 31.

Aveo’s acting head of development George Petersen said proceedings would have no impact on residents or operations of the Springfield retirement community.

“Aveo is proud of the retirement community we’ve created in Springfield, which includes a mix of serviced and independent living apartments, and best in class resident amenities,” Mr Peterson said.

Originally published as Springfield City Group takes Aveo Retirement Homes to Supreme Court