Regis had commenced the proceedings seeking a declaration from the Court that the Asset Replacement Charge (ARC) may be lawfully imposed without contravening the Aged Care Act or its associated regulatory instruments.

All individuals entering Regis’ facilities from 1 May 2016 have been asked to sign an agreement, which includes an agreement to pay the ARC. Regis described the purpose of charging the ARC as being to fund renovations, refurbishments and reinstatements of fixtures, fittings, and infrastructure, rebuilding and construction of or at Regis facilities across Australia.

Regis accepted that the ARC was a charge relating to future activities, and was not a charge for services or works from which the person who is asked to pay the charge is likely to derive any personal benefit.

The Court held that the imposition of a fee for modifications and improvements to a facility in the future, that is not intended to benefit the person who pays the fee, enhances only the financial standing and asset base of the approved provider, and is financially detrimental to the care recipient. The Court stated at [88]:

"The imposition of a fee such as the ARC by an approved provider, as a condition of that approved provider being prepared to enter into a resident agreement, does not enhance choice for the person. It inhibits choice. It renders that facility unavailable to the person unless she or he agrees to pay the extra fee demanded. It diminishes flexibility because it adds a “non-negotiable”, additional component, to the factors a person and her or his family must weigh up when deciding which facility is suitable, and which is affordable. It is certainly not “responsive” to aged care, as it avowedly has no connection with the provision of residential care to the individual who is asked to pay the fee."

Overall the Court found that the ARC was inconsistent with the scheme established by the Aged Care Act and its associated regulatory instruments and was prohibited by the terms of s 56-1 of the Act.

The full decision in Regis Aged Care Pty Ltd v Secretary, Department of Health [2018] FCA 177 may be read here.