Caretaker disputes can create confusion and frustration for a body corporate, particularly when there is disagreement about the caretaker’s duties or performance. The appropriate response depends on the engagement terms, the caretaker’s role and the type of dispute.
This article outlines practical steps for resolving a dispute, possible termination pathways and the limits of the Commissioner’s office and QCAT.
How can a body corporate resolve a caretaker dispute?
Start by identifying the issue clearly. Disputes commonly involve different expectations about the scope of the caretaker’s duties, the standard of performance or the meaning of the engagement.
Open communication can clarify expectations before the dispute escalates. The committee should set out the concern in writing and explain what it wants the caretaker to do or stop doing.
The body corporate should also check whether the matter can be addressed through:
- a meeting with the caretaker
- written clarification of the duties or performance expected
- a committee motion
- a motion for consideration at a general meeting
- independent advice about the engagement terms.
Self-resolution should generally be attempted before making a formal dispute application. Reasonable attempts can include communicating in writing, presenting a motion to the committee or presenting a motion to a general meeting. The body corporate may need to use more than one of these steps, depending on the parties and the issue.
If the dispute cannot be resolved, the body corporate should identify whether it is a contractual dispute, a dispute about the BCCM Act or both. You can read more about practical options in disputes with building managers and resolving disputes in a body corporate.
What should the committee check before taking action?
Before taking action, obtain and review the complete engagement or contract. Check:
- the caretaker’s exact duties and powers
- the term of the engagement
- any renewal or extension provisions
- payment and performance terms
- termination provisions
- dispute resolution clauses
- whether the arrangement also includes body corporate management or letting agent functions.
The duties of a body corporate manager are contained in the written engagement with the body corporate. A manager with a committee can only do what the body corporate asks them to do, while an arrangement without a committee can give the manager wider powers.
A caretaker may be engaged as a service contractor, a body corporate manager or a letting agent. These roles do not necessarily have identical rights and obligations. The BCCM Act allows the regulation module to set requirements about the term, renewal, extension, transfer and termination of an engagement or authorisation.
The code of conduct applies to a body corporate manager and a caretaking service contractor. It is taken to be included in the terms of the engagement and prevails over an inconsistent contract term.
The body corporate should understand the engagement terms before taking further action. It may also seek independent legal advice about interpreting the contract, particularly where termination could create contractual or financial consequences.
A manager must act honestly, fairly and professionally, act in the best interests of the body corporate if lawful to do so, and avoid fraudulent or misleading conduct. The manager must also comply with the relevant legislation and keep records required by the Act.
When can a body corporate terminate a caretaker’s engagement?
Termination depends on the caretaker’s legal role and the applicable engagement. A body corporate may terminate a body corporate manager’s engagement if the manager agrees, is convicted of an offence involving dishonesty, fraud or assault, or fails to perform duties or comply with the Act or code of conduct.
For a manager’s failure to perform or comply, the body corporate must first issue a remedial action notice. If the issue is not fixed within the notice period, the manager’s engagement can be terminated by ordinary resolution at a general meeting.
The process may be different for a caretaking service contractor or letting agent. The BCCM Act provides that a party to a dispute about a claimed or anticipated contractual matter involving a body corporate manager, caretaking service contractor or letting agent may apply for specialist adjudication or QCAT’s original jurisdiction.
The regulation module may also prescribe particular circumstances in which an engagement or authorisation may or may not be terminated, despite the contract or another arrangement.
Termination may also occur under the engagement terms or by agreement, but the contract should be reviewed before relying on either option. The consequences may include disputes about notice, compensation, management rights, access to common property and the handover of records or other body corporate property.
Where management rights are involved, additional statutory provisions can apply to the transfer and termination of a letting agent’s authorisation or service contract. For example, the BCCM Act provides a process for requiring the transfer of management rights after specified code-related conduct, including a code contravention notice and a later transfer notice.
Professional advice may be appropriate before termination. The body corporate should consider the likely contractual and financial consequences before proceeding.
What is a remedial action notice and what must it include?
A remedial action notice is a written notice giving the manager an opportunity to fix a failure before the body corporate proceeds with termination.
For a body corporate manager, the notice must state:
- the duties the manager has not performed, or details of the claimed code breach
- specific details identifying the issue
- a notice period of at least 14 days for fixing the issue
- that the body corporate may end the engagement if the issue is not fixed within that period.
The notice should be factual and sufficiently detailed. It should identify the relevant contract duty, statutory obligation or code requirement, explain what is alleged to have happened and state what must be done to remedy the issue.
A committee may decide to issue the initial remedial action notice for a manager’s failure to perform or comply. If the scheme has no committee, the decision can be made by the owners of at least one-half of the lots.
An individual lot owner cannot independently decide to issue a remedial action notice on behalf of the body corporate. A lot owner can raise the concern with the committee or submit a motion for consideration through the appropriate body corporate process.
The manager notice process may not apply in exactly the same way to every caretaker arrangement. A service contractor, letting agent or combined engagement may be subject to different contract terms, regulation module provisions and statutory processes.
Who decides whether a caretaker engagement is terminated?
The decision-maker depends on the action proposed and the role covered by the engagement.
For a body corporate manager whose failure to perform or comply has not been remedied, termination requires an ordinary resolution at a general meeting. A committee-level decision to issue the remedial action notice is not enough to terminate the engagement.
The body corporate, rather than an individual owner, must make decisions about the engagement. The committee does not have the power to engage a body corporate manager. Engagement requires a motion at a general meeting by ordinary resolution where there is a committee.
For a service contractor or letting agent, check the applicable contract and regulation module before preparing a motion. The BCCM Act recognises that the regulation module may regulate the engagement, including circumstances for termination or transfer.
The meeting motion should identify the proposed decision, the engagement involved and the reason for the proposed termination. Keep supporting documents with the meeting papers so lot owners can understand the basis for the decision.
Respectful communication remains useful even when a formal motion is being prepared. It may resolve the issue without the cost and disruption of termination proceedings.
Can the Commissioner’s office or QCAT deal with a caretaker dispute?
The Commissioner’s office has a limited role in contractual caretaker disputes. The BCCM Act defines a dispute to include a dispute between a body corporate and a caretaking service contractor, service contractor or letting agent.
However, a dispute about a claimed or anticipated contractual matter involving the engagement of a body corporate manager or caretaking service contractor, or the authorisation of a letting agent, is dealt with as a complex dispute. The only remedy for a complex dispute that may be resolved under the chapter is an order of a specialist adjudicator or QCAT exercising its original jurisdiction, subject to the appeal provisions.
The Commissioner’s office does not determine every contractual caretaker dispute through ordinary department conciliation or department adjudication. A contractual dispute about termination, performance of duties or rights under the engagement may need to proceed through specialist adjudication or QCAT.
A specialist adjudicator may make an order that is just and equitable to resolve a contractual matter about the engagement of a body corporate manager or service contractor, or the authorisation of a letting agent.
The usual dispute resolution requirements still matter. A person applying under the BCCM Act must generally be a party to, and directly concerned with, the dispute and must have made reasonable attempts to resolve it internally.
An owner or occupier generally cannot bring a direct Commissioner dispute against a caretaker simply because they disagree with the caretaker’s conduct. The legislation identifies the relevant parties for caretaker disputes, including the body corporate and the caretaking service contractor.
Before choosing a forum, the body corporate should identify the parties, the legal character of the engagement and the outcome sought. Termination can have significant contractual and financial consequences, so professional advice may be appropriate.
Caretaker disputes are easier to manage when the parties clarify duties early, follow the correct decision-making process and choose a resolution pathway suited to the engagement. If your body corporate needs help understanding its options, contact our team at reception@stratacare.com.au.
