Termination of Caretaking Agreements

Published: 16 March 2007.

By Small Myers Hughes Lawyers

What to look out for

An Owners Corporation can take steps to terminate a Caretaking Agreement in New South Wales in one of two ways:
1. By applying to the courts to have the agreement terminated because the caretaker has (allegedly) failed to perform a material duty referred to in the agreement after a Default Notice has been served on the caretaker in accordance with the terms of the agreement and the material default has not been remedied within the time referred to in the notice, or
2. By making an application to the Consumer, Trader and Tenancy Tribunal for an order under Section 183A of the Strata Schemes Management Act 1996.
An application to the Tribunal under Section 183A can only be made by the Owners Corporation for the strata scheme on one or more of the following grounds:
(a) that the caretaker has refused or failed to perform the agreement or has performed it unsatisfactorily,
(b) that charges payable by the Owners Corporation under the agreement for the services of the caretaker are unfair,
(c) that the agreement is, in the circumstances of the case, otherwise harsh, oppressive, unconscionable or unreasonable.
The Tribunal can make an order with respect to a Caretaker Agreement:
(a) terminating the agreement, or
(b) requiring the payment of compensation by a party to the agreement, or
(c) varying the term or declaring void any of the conditions of the agreement, or
(d) confirming the term of any of the conditions of the agreement, or
(e) dismissing the application.
Under the transitional provisions of the legislation, an order cannot be made under Section 183A on the ground that the duration of the agreement is harsh, oppressive, unconscionable or unreasonable if the agreement was entered into prior to the 10 February 2003.
It is important to understand that an individual owner cannot make an application to the Tribunal. It must be made by the Owners Corporation after the Owners Corporation has voted at a general meeting to do so.
Practical considerations for Caretakers
1. Never under estimate how a small or insignificant dispute with an Owners Corporation Committee or Committee Member can quickly escalate into a full on dispute.
2. Do your absolute best to clear up a pending problem before it becomes a festering sore.
3. If you have one or more committee members who (in your opinion) are being unfair or unrealistic in their demands and you cannot resolve outstanding issues with them, ensure that they are isolated and that the rest of the committee and/or the Owners Corporation Members are aware of how unreasonable these people are being.
4. If the matter just won’t go away, get your lawyer involved and try and have the dispute mediated. In most instances, mediation works and is relatively inexpensive.
5. Avoid litigation at all costs as it is expensive, debilitating to your business and personally distressing. Litigation must only ever be an absolute last resort!