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.