Remedial Action Notices to Caretakers
In this article, Nicole Wilde our Special Counsel on the Gold Coast considers the implications of a recent QCAT decision for bodies corporates & the scrutiny their Remedial Action Notices issued to their Caretakers may be subject to.
The QCAT decision in Zhou
Lim Pty Ltd v Body Corporate for Miami Pacific [2020] QCAT 261 (8 July
2020) highlights the level of scrutiny that a body corporate’s remedial
action notice may be subjected to if a caretaker decides to challenge a body
corporate decision to terminate based the caretaker’s failure to comply with
the remedial action notice.
Briefly, the key facts of the matter
were:
- The caretaker had a caretaking contract with the body corporate that required it to maintain the common areas in clean and tidy condition consistent with the position of a caretaker in a residential unit building;
- The
body corporate committee were of the view that the caretaker was not complying
with its duties under the contract and engaged a consultant to prepare reports
detailing the caretaker’s breaches;
- The
body corporate issued a remedial action notice to the caretaker alleging 41
separate breaches by the caretaker;
- The
caretaker failed to remedy some of the breaches set out in the remedial action
notice;
- The
body corporate exercised its power to pass an ordinary resolution by secret ballot
to terminate the caretaker’s contract;
- The
caretaker challenged the body corporate’s termination decision alleging that a
range of grounds including that the remedial action notice was invalid, the
body corporate acted unreasonably in issuing the remedial action notice or
alternatively that the caretaker had complied with the remedial action notice.
Ultimately, after going through
each of the 41 breaches set out in the remedial action notice, which had been
prepared by the body corporate’s solicitors, the body corporate was able to
satisfy QCAT that 20 were valid remedial action notice breaches which the
caretaker had not remedied within the timeframe set out in the remedial action
notice. QCAT found that 5 alleged breaches had been remedied by the caretaker
and that 14 alleged breaches had not been established by the body corporate.
QCAT confirmed that the body
corporate’s decision to terminate the caretaker’s contract was valid and the
caretaker therefore lost any benefit or business it had under the caretaking
agreement.
This case shows why it is
important to verify that each any every allegation made in a remedial action
notice is properly linked back to the caretaker’s contractual duties and can be
substantiated before passing a resolution to terminate the caretaker’s
contract.
If you would like advice or
assistance in preparing a remedial action notice or assessing the validity of a
remedial action notice, please do not hesitate to contact our specialist strata
lawyers.