Body corporate disputes involving caretakers can generate considerable confusion and frustration. Our interactions with clients indicate that further clarification of the options available to resolve caretaker disputes and the legal requirements for termination would be helpful. In this article, we will highlight what the relevant legislation says about terminating an engagement and what steps the committee might consider before things escalate. We will also clarify the role of our office in relation to caretaker disputes.
Steps to consider when a dispute arises
Disputes often arise between committees and caretakers due to differing expectations, or a misunderstanding about the terms of the caretaker’s engagement. Most commonly the scope of their duties.
The first step in trying to resolve any dispute within a body corporate is open communication. Talking through a problem or misunderstanding can go a long way towards ensuring parties are on the same page – especially when it comes to clarifying the expectations around a caretaker’s duties.
If communication between the caretaker and the committee are unable to resolve the issues that have arisen, the body corporate may wish to seek independent legal advice to interpret the terms of the contract. It is important for the body corporate to have a full understanding of the terms of the engagement before any further action is taken.
If the body corporate is satisfied that the terms of the engagement are not being fulfilled or that there has been a breach of the code of conduct for caretakers, they may wish to take steps to terminate the contract.
Termination by remedial action
The legislation enables a body corporate to terminate their engagement with a service contractor, or the authorisation of a letting agent, if that person is:
- engaging in misconduct
- grossly negligent in carrying out their functions under the engagement
- not performing their contractual duties
- not complying with the relevant code of conduct or disclosure requirements.
Before moving to terminate on any of these grounds, the body corporate must first issue a remedial action notice. The decision to give the notice must be made by the committee or the lot owners at a general meeting – an owner cannot make this decision. The chief function of the remedial action is to notify the individual and give them an opportunity to remedy the matter.
While we regularly advise clients that the format of the notice is an internal matter (as there is no prescribed form), the legislation clearly outlines what information must be included in the notice. The remedial action notice must firstly state that the person has acted in one of the ways listed above and provide details of the person’s actions that adequately identify the problem. The notice must also specify a period of not less than 14 days within which the issue is to be rectified, and state that the body corporate can terminate the engagement or authorisation if there is non-compliance within that period.
Although the committee can vote to issue the initial remedial action notice, a committee-level decision is not sufficient to terminate the engagement if they believe the notice has not been complied with. An ordinary resolution at a general meeting is required for termination.
Other grounds for termination
As an alternative to termination by remedial action, the body corporate can also terminate a person’s engagement as a service contractor or authorisation as a letting agent, by ordinary resolution, if that person commits any one of the several offences listed in the regulations. Such offences include – being convicted of an indictable offence involving fraud; dishonesty or assault; carrying on a business involving the supply of services to the body corporate (or to owners or occupiers of lots) that is contrary to law; or transferring an interest in the engagement or authorisation without approval of the body corporate.
Alternatively, the body corporate can also decide to terminate by ordinary resolution under the terms of the engagement or authorisation, or simply by agreement.
Limited involvement of the Office of the Commissioner for Body Corporate
Clients may not be aware that our office can only play a limited role in caretaker disputes. This is mainly because disputes involving caretakers are often connected to their engagement with the body corporate. To clarify, contractual matters concerning – the termination of an engagement or authorisation; a breach of the terms of an engagement or authorisation; the performance of duties under the terms of the engagement or authorisation; or the exercise of rights or powers under the terms of the engagement or authorisation are defined as complex disputes under the legislation. This office does not have jurisdiction – via department conciliation or department adjudication – to deal with complex disputes.
According to section 229 of the Body Corporate and Community Management Act 1997, applicants seeking to resolve a complex dispute must have the matter determined by a specialist adjudicator or the Queensland Civil and Administrative Tribunal (QCAT). A specialist adjudicator will typically be someone who has the appropriate legal qualifications, standing and expertise in the relevant area of law. Ultimately, the choice of forum for the dispute is a matter for the applicant. You can read more about complex disputes and the process for specialist adjudication in the practice directions that are available on our website.
For those caretaker disputes where the subject matter is suitable for conciliation or adjudication through this office, the combination of parties is limited to the caretaking service contractor and the body corporate, or a service contractor and the body corporate. Therefore, an owner or an occupier cannot bring a dispute directly against a caretaking service contractor or a service contractor, or vice versa.
While we have outlined the various legislative avenues for termination, practically speaking, the decision to terminate may not be as clear cut. In view of factors such as the likely detriment to the person being terminated, the complexity of contractual issues, and the potential for legal repercussions, we consistently recommend that bodies corporate should seek independent legal advice about their options if they are considering termination.
One point that will arguably be met with little debate is that it is in the best interests of all involved – caretakers, bodies corporate and owners alike – not to get bogged down in the mire of these kinds of disputes. We urge caretakers and bodies corporate to keep the lines of communication open and discuss issues respectfully as they arise, to avoid unnecessary escalation wherever possible.
Author: Jane Wilson, A/Commissioner for Body Corporate and Community Management