A body corporate cannot simply end a caretaking agreement because the committee is unhappy with the caretaker’s performance. The agreement, applicable regulation module and decision-making process must be checked first.
How can a body corporate terminate a caretaking agreement?
In Queensland, a caretaking agreement is generally an engagement of a service contractor. The Body Corporate and Community Management Act 1997 (BCCM Act) and the regulation module applying to the scheme set out the framework for these engagements.
For a scheme covered by the Standard Module, the body corporate may terminate a service contractor’s engagement:
- under the BCCM Act
- by agreement with the service contractor
- under the terms of the engagement.
Termination must be approved by ordinary resolution of the body corporate.
A breach-based termination may be available where the caretaker has engaged in misconduct or gross negligence, failed to carry out duties, or contravened the applicable code of conduct. The body corporate must follow the remedial action process before relying on these grounds.
The agreement may also end when its term expires. A service contractor’s engagement, including any extension or renewal rights, must not have a term longer than 10 years under the Standard Module.
For more background, see our guide to caretakers and maintenance responsibilities.
What should a body corporate check before taking action?
Start by obtaining the complete signed agreement and checking:
- the caretaker’s functions and duties
- the term, renewal rights and expiry date
- any termination clauses
- applicable notice requirements
- access, occupation or other rights connected with the engagement
- the code of conduct that applies.
A service contractor’s engagement must be in writing and state its term, functions and payment arrangements.
The BCCM Act also provides that the code of conduct for caretaking service contractors is taken to be included in the contract. If the code conflicts with another contract term, the code prevails.
Check which regulation module applies to your scheme before relying on a process or timeframe. The Standard Module process is not automatically the process for every Queensland scheme.
The committee should identify who has authority to make each decision. The body corporate should act reasonably, keep the process focused on the agreement and legislation, and give the caretaker a fair opportunity to respond.
Consider whether the issue can be resolved without termination. A written request, agreed performance plan or negotiated end to the agreement may avoid a longer dispute. Our article on options in caretaking and letting agreements and whether they can be ended may help with this assessment.
What is a Remedial Action Notice and when might it be used?
A Remedial Action Notice is a written notice used where the body corporate alleges particular misconduct, negligence, failure to perform duties or a code contravention.
For a Standard Module scheme, the notice must:
- state what the body corporate believes the caretaker has done or failed to do
- give enough detail to identify the alleged misconduct, unperformed duty or contravention
- require the issue to be remedied within the stated period
- allow at least 14 days after the notice is given
- explain that the engagement may be terminated if the caretaker does not comply.
The notice should describe the alleged failures accurately and avoid assumptions that the body corporate cannot support. It does not replace checking the agreement or obtaining appropriate advice.
If the caretaker does not comply within the stated period, the body corporate may put forward a motion to terminate. The motion requires ordinary resolution and, for a caretaking service contractor, a secret ballot.
A Remedial Action Notice is not required for every possible termination pathway. For example, termination by agreement or under another applicable provision may involve a different process.
What evidence and records should the body corporate keep?
Carefully record the issue from the first complaint. Useful records may include:
- the relevant agreement and amendments
- work orders, inspection reports and photographs
- dates and details of missed or incomplete duties
- emails, letters and meeting minutes
- complaints from residents or contractors
- the caretaker’s responses
- any quotes or reports supporting the alleged failure
- the Remedial Action Notice and proof it was given
- evidence of what happened during the notice period
- meeting notices, motions, voting records and minutes.
Keep the records factual and organised. Avoid exaggerating the alleged breach or including unrelated complaints. Clear records can help the body corporate decide whether enforcement or termination is appropriate and respond to any later challenge.
The BCCM dispute process expects parties to attempt self resolution first. Written communication, a committee motion or a motion at a general meeting may form part of that process, depending on the dispute.
You can also read our guide to caretaker disputes with the Commissioner’s Office.
What happens if the caretaker disputes the termination?
A caretaker may dispute whether there was a valid breach, whether the notice gave enough information, whether the issue was remedied, or whether the body corporate followed the correct voting and notice process.
A dispute about a claimed or anticipated contractual matter involving a caretaking service contractor may be taken to a specialist adjudicator or QCAT, subject to the applicable jurisdiction and process.
The body corporate should keep providing relevant information and consider the caretaker’s response rather than treating termination as automatic. One outcome in another scheme does not guarantee the same result in your scheme. The agreement, evidence, conduct and applicable legislation will all matter.
If self resolution fails, conciliation is normally the compulsory first step for a BCCM Act dispute before an application can proceed further.
Terminating a caretaking agreement requires a careful review of the contract, evidence and applicable process, so contact StrataCare at reception@stratacare.com.au if your body corporate needs help working through the next step.
