Body Corporate Dispute - A dispute with your Caretaker? So what are your options?

It seems tous that disputes between Bodies Corporate and Caretakers are on the rise.

Without doubt there are Caretakers out there, that are simply refusing to perform their duties to the standard required by the Caretaking Agreement (“the Agreement”) – however sometimes there is some misunderstanding as to what the Caretaker is in fact obliged to do under the Agreement– often brought about because the Agreement was poorly prepared by the Developer of the Scheme.

So what arethe options for a Committee, which has concerns about the performance of aCaretaker?

In ourexperience the most effective approach is a three-step process, rather thantaking the fight to the Caretaker from the outset. The process is as follows:

Step One – Check the Agreement

Invariablyin discussions with Committees about their concerns, it turns out for at least someof those concerns, that the Caretaker is not obliged to do the task.

Unfortunately,sometimes that particular task is what has caused the “rot to set in” in therelationship in the first place and it can be very hard to move back to aworkable relationship.

It isimportant that Committees do their homework as to what the Agreement requiresthe Caretaker to do. Sometimes, this can be a more difficult exercise thanexpected and it involves a consideration of whether:

• thereis a specific duty on the Caretaker under the Agreement or whether the duties underthe Agreement are of a more vague/general nature – if the duties are of a morevague/general nature, then it may become necessary to identify theimplied/inferred duties;

• theAgreement specifies the standard to which the duty is to be carried out (thatis, is the standard to which the Caretaker is required to carry out the duty a“high standard” or simply for the Caretaker to use its “reasonable endeavours”to do the duty –the differing requirements may have substantial effect on the BodyCorporate’s position);

• theduty is a “specialist skill”, thereby excusing the Caretaker from having toperform the duty - this may even be the case in respect of supervision of someworks, such as supervision of works being performed at height.

If there isany uncertainty about whether the Caretaker is obliged to do the duty or not,the Committee might be better off seeking clarification about the duty before goingto war with the Caretaker based on a suspicion.

Step Two – Consider the Intervention of aThird-Party Consultant or Training for the Committee and/or Caretaker

A 3^rdparty assessment of the Caretaker’s performance does not need to be anacrimonious exercise, indeed it can be beneficial to both sides. 

Approachedin the correct manner, the assessment can in fact help to repair therelationship between a Caretaker and the Committee as:

• theCommittee finds out where it is expecting more than the body corporate isentitled to receive; and

• theCaretaker finds out where it needs to pull its socks up in terms of thestandard to which the duty is being done.

The partiescould also consider training for both the Caretaker and the Committee(particularly where the Committee members are interested in serving on theCommittee for any lengthy period).  The ABMA(Australian Building Management Accreditation) has access to some extremelyhelpful courses for both the Committee and the Caretaker – see https://www.abma.com.au/training-programs.php).

The partiesmight also benefit greatly from negotiating a variation of the duties in theAgreement, to replace the current (possibly quite vague) duties with a properlydetailed schedule of duties - there are a number of consultants whom canprepare such a schedule for the parties.

The benefitto both parties is that there is then some certainty about the nature and thefrequency of the duties to be performed - which might help to preventunnecessary (and often costly) skirmishes between the parties.

Step Three - the Remedial Action Notice Process

When negotiations have been exhausted, the BodyCorporate may have to issue a Remedial Action Notice.  Unfortunately, some recalcitrant Caretakersdo not take any notice until a Remedial Action Notice is issued against them.

So, what isa Remedial Action Notice?  Put simply:

• it is a glorified Notice to RemedyBreach, setting out details of the manner in which the duties have not beenperformed to the standard required under the Agreement;
• it is a legislative prerequisite toterminating a caretaking agreement for inadequate performance of duties; and
• the Notice must STRICTLY comply withthe requirements of the regulating module, otherwise the Notice is invalid.

No matter how well prepared the Remedial ActionNotice is, it is quite likely that at least some aspects of the Notice will bedisputed by the Caretaker, and that can be a complicated and messy process,however unfortunately:

1. ifthe Caretaker will not otherwise satisfactorily perform the duties; and
2. giventhe strict legislative duty on the Body Corporate to repair and maintain itscommon property (and some other elements of the scheme),

the Body Corporate has little option but to undertake thatprocess.

Often thisdispute process leads to a negotiated move-on of the Caretaker, which is a goodoutcome for both parties – however, parties need to accept that outcome cantake time.

The casesare littered with examples of where Remedial Action Notices in the past havebeen determined to be invalid. It is certainly not an exercise that Committeesor Body Corporate Managers themselves should take on, without the benefit ofadvice from a highly experienced body corporate lawyer (that is, the team atActive Law….).

Put simply,the more particular and detailed the Remedial Action Notice, the more pressurethere is on the Caretaker to address the complaints in the Notice – andconversely, a weak/dubious Remedial Action Notice is likely to have no realeffect on a Caretaker.

At Active Law we are regularly asked to advise Committees on their concerns about the performance of Caretakers and to prepare Remedial Action Notices.  If you have any concerns about the performance of the Caretaker for your scheme, please don’t hesitate to contact us for assistance. 

Disclaimer:
Reliance on content the material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.