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Can a Body Corporate deduct money from a Caretakers remuneration


It depends on the terms of the caretaking agreement.

Caretaking Agreement

Some caretaking agreements allow the body corporate to recover the costs of rectifying a default of the caretaker by deducting the costs incurred from the caretaker’s remuneration.

If this type of clause is in a caretaking agreement, the body corporate must usually do 3 things before it can deduct money from a caretaker’s remuneration:
1. Prove that there is a default (eg that the caretaker did not clean the pool or common foyer area);
2. Do something to fix that default (eg hire a cleaner to clean the pool or common foyer area); and
3. Incur costs to rectify the default (eg the cleaner charges $330.00 to perform the cleaning duties usually performed by the caretaker).

In this scenario, the amount that may be deducted would be limited to the costs incurred and not an amount to represent general compensation or damages to the body corporate.


If there is no such clause in the caretaking agreement, the body corporate may breach the caretaking agreement if it decides to deduct the caretaker’s remuneration.

That is because the body corporate has a contractual obligation to pay the caretaker remuneration, and a failure to pay the full remuneration can show an intention to not be bound by the terms of the caretaking agreement.

At law, this is called repudiatory conduct.

This repudiatory conduct, if accepted by the caretaker, entitles the caretaker to sue the body corporate for damages for breach of contract.

Depending on the nature of the caretaking agreement and the repudiatory conduct, the amount of damages that can be recovered from the body corporate can amount to hundreds of thousands of dollars.

What to do?

If your bodies corporate are having issues with their caretaker, there may be other ways to address the problem. Those other avenues should be explored. If deducting the caretaker’s remuneration is desired, the body corporate must only do so within the bounds of the caretaking agreement to avoid the risk of a potentially expensive damages claim.

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Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

Lessons for Building Managers from a Recent Court Case



A recent decision of the NSW Civil and Administrative Tribunal (NCAT) has provided Owners Corporations in NSW with what is now seen as a more “risk free” pathway to terminate a Building Management Agreement.

Until recently, if an Owners Corporation was not satisfied with the performance of its Building Manager, it has been usual practice that the Owners Corporation would commence legal action to terminate the Agreement, by alleging that the Building Manager was in substantial breach of one or more of the Agreement terms – or failed to satisfactorily perform the building management duties under the Agreement.

The danger however with this approach has always been that if the Court later decides that the Building Manager was not in substantial breach of the Agreement, the Owners Corporation is then liable to pay substantial damages to the Building Manager for the wrongful termination of the Building Management Agreement.

1. an order terminating the Agreement,
2. an order requiring the payment of compensation to a party to the Agreement,
3. an order varying the term, or varying or declaring void, any of the conditions of the Agreement,
4. an order that a party to the Agreement take any action or not take any action under the Agreement, or
5. an order dismissing the application.

The section further states that NCAT may make an order under this section on any of the following grounds:
(a) that the Building Manager has refused or failed to perform the Agreement, or has performed it unsatisfactorily,
(b) that charges payable by the Owners Corporation under the Agreement are unfair,
(c) that the Building Manager failed to disclose that he had a direct or indirect pecuniary interest in the strata scheme, or was connected to the developer, and
(d) that the Agreement is, in the circumstances of the case, otherwise harsh, oppressive, unconscionable or unreasonable.


The strata plan in this matter was registered in January 2001 and covered two buildings in Ultimo, Sydney that were originally developed by Meriton. In October 2000, Meriton sold the caretaker management rights to a building management company which has had control of those rights since that time. However, for whatever reason, the Owners Corporation did not receive a full copy of the Building Management Agreement until 2020!

When the Owners Corporation eventually reviewed the Building Management Agreement, they discovered that the Agreement only provided for annual increases in management fees in accordance with the CPI. The building manager however, had been charging annual increases of 5% – since October 2000.

The Owners Corporation was also dissatisfied with the performance of the Building Manager and ultimately commenced proceedings in NCAT, seeking an order that the Building Management Agreement be terminated pursuant to s72 of the Act. Specifically, the Owners Corporation sought an order on the basis of several parts of s72, including:
• that the Building Manager had performed the Agreement unsatisfactorily;
• that the charges payable by the Owners Corporation under the Agreement were unfair;
• that the Building Management Agreement was, in the circumstances of the case, harsh, oppressive, unconscionable, or unreasonable.


On my reading of the case, the Building Manager made a lot of mistakes that would have been avoided, if they had read and understood their Agreement.

For example, the Building Manager:
1. refused to provide the Owners Corporation access to CCTV footage;
2. failed to provide keys when requested by the secretary of the Owners Corporation;
3. failed to provide the Owners Corporation with a proper copy of the Building Management Agreement until 2020;
4. had been charging the Owners Corporation based on 5% annual increases, instead of the CPI increases as specified in the Building Management Agreement;
5. allowed the principal of the Building Management company to be a member of the strata committee, although prohibited under the Building Management Agreement;
6. allowed its employee to improperly commence and pursue Supreme Court proceedings in the name of the Owners Corporation, attempting to prevent the 2020 AGM from going ahead, without proper authority or instructions; and
7. had, through the conduct of the principal and employees of the Building Manager prior to the 2020 AGM, falsely represented that the AGM had been cancelled, which conduct was allegedly borne out of a desire to control the Owners Corporation, rather than to serve the Owners Corporation, as required by the Building Management Agreement.


The finding in this case was that the Building Manager had failed to perform the relevant Agreement satisfactorily, and that the Building Management Agreement, in the circumstances of the case, was harsh, oppressive, unreasonable or unconscionable.

• This sounds really basic, but always have a 100% understanding of what your duties are under your Building Management Agreement and don’t deviate from the performance of those duties.
• Although not relevant to this case:
(a) Diarise your option exercise dates and don’t miss them. If you are one day late, you lose the ability to exercise the option (and later options) and your remaining term falls away.
(b) Stay in regular touch with your owners by way of a newsletter. Let them know the good things that you do at the complex and remember, you only need 51% of those owners that vote at a meeting of the Owners Corporation (or Body Corporate) to extend the term of your Building Management Agreement.
(c) Wherever possible, maintain good lines of communication with your committee and strata manager.

Article Written by Col Myers of Small Myers Hughes Lawyers

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

COVID-19 Measures for Strata and Community Schemes Extended


The NSW Department of Fair Trading has recently announced that the State Government has extended its temporary COVID-19 emergency measures for strata and community schemes to 29 September 2022.

This means that strata Owners Corporations and Community Land Associations can continue, until 29 September 2022, to:

• meet and vote electronically, without passing a resolution to authorise this beforehand;
• validly execute documents, without affixing the seal of the Owners Corporation or Association.

The previous temporary measure of allowing certain documents to be sent by email has not been extended because of changes made by the COVID-19 and Other Legislation Amendment (Regulatory Reforms) Act 2022 (the Act) on 24 March 2022. The changes mean that an Owners Corporation and Association can send documents to an email address nominated by a lot owner, lot occupier or another person on the roll.

The Act makes other permanent changes to the strata and community scheme laws on ways of voting and using an electronic seal. These changes are currently expected to start on 30 September 2022, once supporting regulations are made.

The measures allow Owners Corporations and Community Land Associations to continue operating as they have been during 2020 and 2021, until the permanent changes commence.

NSW Strata Scheme Reporting

All strata schemes in NSW will have to report annually to NSW Fair Trading through a new strata portal by 31 December 2022.

The reporting will make it easier to access key strata information, and it will deliver a range of benefits. For example, emergency services will have access to a dedicated contact for each scheme in the event of an emergency.

The Department of Fair Trading will be implementing the portal’s functions in stages. From July 2022, Owners Corporations can register a scheme, set up a profile and access educational webinars. More features will be added in the following months.

Strata communities in NSW can now start to prepare for the reporting now by:

• knowing what information you’ll need to report and where to find it;
• deciding who will do the reporting and who will be the emergency services contact.

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Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

2022 08 Aug - COVID-19 Measures for Strata and Community Schemes Extended

Two Common Misconceptions about Withholding Access to Records


Take the following real-life example (and assume that the person satisfies all eligibility requirements):
• An ‘interested person’ or committee member starts, or threatens to start, a legal proceeding against the body corporate.
• Shortly after, the person then requests access to the financial records of the body corporate, including profit and loss statements, bank statements, tax invoices, voting papers approving expenditures, and balance sheets.
• The body corporate believes the person is fishing for information to help them in the legal proceedings.

Can the body corporate withhold access to these records?


There are only two recognised grounds on which a body corporate may withhold access to its records.

These are:
• a legal proceeding between the body corporate and the record requester has started or is threatened, and the records are privileged from disclosure;
• the body corporate reasonably believes a record contains defamatory material.

Legal proceedings and privilege

If a legal proceeding (which would include an application to the Commissioner’s Office) between a person and the body corporate has started or is threatened, that alone is not sufficient to allow a body corporate to withhold access to its records.

The records must also be privileged from disclosure.

Unless those financial records in the above example are also privileged from disclosure (which we would think unlikely, although privilege does need to be assessed on the circumstances of each case), the body corporate would not be entitled to withhold access to those financial records.

Defamatory material

The ability of a body corporate to withhold access to its records based on there being defamatory material applies regardless of whether the requester is a committee member or an ‘interested’ person.

If a record, or part of a record, is reasonably believed to contain defamatory material, it does not mean that other non-defamatory records cannot be accessed.

The body corporate must have a ‘reasonable belief’ that a record contains defamatory material. A ‘reasonable belief’ is more than a guess, and would usually be a belief based on:
• legal advice;
• other expert advice.

It could arguably also be a belief based on, at a minimum, the committee members viewing the records and, acting reasonably, resolving to withhold access to certain records on the ground of the records containing defamatory material.

What does this mean?

A body corporate may not withhold access to its records solely because the records are confidential, or legal proceedings have been started or threatened.

The records must be privileged from disclosure, or there must be a reasonable belief that the records contain defamatory material, to entitle a body corporate to withhold access to its records.

Getting this wrong could lead to a dispute resolution application in the Commissioner’s Office, so it is important to obtain early, tailored advice about the obligations of a body corporate to allow access to its records.

Article Written by Brendan Pitman (19 July 2022)

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.



The NSW Department of Planning and Environment has recently clarified its views in relation to the application of the State – Wide Short term Rental Accommodation (STRA) planning laws.

You may recall that from the 1st November 2021, new rules commenced in NSW in relation to STRA, including:

• a state-wide planning instrument permitting the use of dwellings for STRA under certain conditions, including limits on the days the activity can take place; and

• a mandatory Code of Conduct that applies to online booking platforms, letting agents, hosts and guests; and

• allowing strata schemes to adopt a by-law that prohibits STRA where a lot is not a host’s principal place of residence. (Any such by-law has to be adopted by special resolution, with 75% of votes supporting the proposal at a general meeting), and

• STRA properties upgraded where necessary to meet certain minimum safety requirements.

After some delays and staggered starts, all these policies have now been put into effect.

Day Limits on STRA

The planning laws now include new ‘exempt’ and ‘complying’ approval pathways that enable STRA within certain day limits:

• where the host is present, STRA is ‘exempt development’ for 365 days per calendar year. This allows hosts to use an existing approved dwelling for the purposes of STRA, without requiring any further approval from the local council;

• where the host is not present, and the site is not on bushfire prone land or a flood control lot, STRA is ‘exempt development’ for:

• 180 days in Greater Sydney;

• 365 days in regional areas; except where a council varies this to no lower than 180 days (although Byron Bay is possibly looking to varying this to 90 days in some parts of the shire and 365 days in other parts);

(Note that where the host is not present, and the booking is for 21 or more consecutive days, the booking will not count towards the above day thresholds).

What does this mean for management rights operators?

Prior to the commencement of the STRA laws, only a limited number of Councils in NSW had local environmental plans that specifically regulated the use of properties for short term rental accommodation. Many operators conducted short term letting from complexes that were zoned (or had a DA) for “residential accommodation”.

Following the introduction of the STRA laws, management rights operators now need to make enquiries with their local Council to ascertain if the development approval (DA) for their building specifically allows short term letting in the complex. If a valid DA for STRA exists, the day caps set under the STRA planning policy do not apply to that building.

However, if the DA for the building was only for residential use (notwithstanding that it may have been used for STRA in preceding years without any Council intervention), the day caps will apply, which this obviously could have a detrimental effect on management rights operations.

It should be noted however that the Departments interpretation of these new STRA laws have not been tested yet in a Court of Law – so watch this space!

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Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

The Changing Face of MR Sales

Management rights, like all industries, change and evolve over time.

One of the biggest changes I have seen in recent years is the sale process itself. In the good old days, contracts were regularly prepared and settled on the basis of:
• Financial verification – 14 days from contract date;
• Legal due diligence – 21 days from contract date;
• Finance – 28 days from contract date;
• Body corporate approval – prior to settlement;
• Settlement – 45 days from contract date.

As soon as contracts were signed, the sellers would regularly go off and book that eagerly awaited European holiday – departing on the day after the due settlement date.

My, how things have changed!

These days, the stars need to align with the planets for a sale to be completed within 45 days.

So What’s Changed?

These days, most sales take at least 10-12 weeks to complete. There are a number of issues that are impacting on the length of a sale that are becoming the new norm.

For starters, body corporate committees are no longer rubber-stamping assignments – which is fair enough.

Bodies corporate are being advised by their solicitors that they don’t have to accept whoever is brought forward by the seller and they are probing far deeper into the work history, character and finances of buyers. Police reports and business plans were never asked for in the past, but are now par for the course. Committees, armed with predetermined questions about what the buyer is going to do for them, now regularly conduct lengthy interviews with buyers and even have some buyers assessed by third party consultants.

I have no problem with this process, as long as it does not become silly (like a body corporate solicitor recently wanting a buyer to justify how he could handle a 2% rise in interest rates, if it were to happen!).

Body corporate solicitors also play a much more involved role in the sale process and costs have ballooned as a consequence.

The Timing Problem

Once sale contracts are signed, a three-step process begins for the buyer:
1. Financial verification;
2. Legal due diligence;
3. Finance approval.

Once these steps are completed, the approval of the body corporate is then sought, with settlement to occur soon after.

Regardless of the seller’s or the buyer’s wishes, the banks and the body corporate solicitors are ultimately determining the timing of settlements. In Queensland, assignments of management rights can be dealt with by the body corporate committee and they do not have to go to general meetings for approval. In NSW, the approval must be given by an Owners Corporation at a general meeting.

Financial Verification is still usually completed within 14-21 days from the contract date. However, the banks are taking a lot more time to process loan applications. Valuers are engaged and they naturally take time to complete their valuations. Then the banks’ credit departments have to assess each application before an offer of finance is issued. Finance offers that used to be ready after one month are now usually taking two months.

This has a cascading effect, as the process of obtaining body corporate consent for a sale is usually only sought once finance approval has been received. Sellers notify their body corporate of the sale and it is at this stage that the body corporate appoints a solicitor to review and advise on the assignment documentation. In ideal circumstances, the body corporate consent is obtained in 30 days or less. In reality, this process is often taking 45+ days.

The Role of the Parties

Throughout the sale process, there is a constant clash of competing interests. The seller, the buyer, the bank and the body corporate all engage lawyers to look after their interests. Obviously, this is fine as long as the clash of interests does not become a clash of self-interest. Each party must play their part.

The sale is a PROCESS and each party has a role to play to complete the process. When embarking on this process, the selling agent is the first point of contact and needs to condition both the sellers and the buyers as to what are reasonable time expectations for settlement.

Sellers need to play their part by cooperating with buyers’ reasonable extension requests and being proactive in managing the sale process (particularly managing owners and committee expectations). Pressuring parties to adhere to unrealistic timeframes is counter-productive and, ultimately, can lead to the sale collapsing, leaving the seller to start the whole process all over again.

Buyers likewise need to hose down their expectations as to when they can start earning income. We all understand that most buyers go for lengthy periods without income in the lead up to settlement, where it is all money out and no money in.

And finally we solicitors, engaged by the buyers and sellers, also need to work cohesively, particularly in relation to satisfying the requirements of the body corporate’s solicitor. Yes, sales are taking longer but we do get there in the end.

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

Update on Caretaking Agreements in NSW Community Title

What is Community Title?

I recently wrote an article that explained the difference between community title and strata title in NSW.

To recap, a good example of a community title is a gated community estate where there may be say 20 houses, each separated by boundaries and each owned by different people. The owner of each house will own all of the building and all of the land on which the building is situated – just like a traditional housing lot. At the centre of the estate there may be a tennis court, swimming pool and parking area. To enter the estate, you need to pass by an electric gate, which is monitored by a security company. In this example, each owner still owns their individual house and adjoining land, but they all share common amenities, including the security system, the entrance gate, the tennis court, the swimming pool and the parking area. These areas are known as “community property” (same as “common property” in strata subdivisions).

A community title scheme is created by the registration of a Community, Neighbourhood or Precinct plan and (much like a strata scheme) caretakers are often appointed by the Community Association to maintain the community property, including all recreational facilities, gardens and parklands.

Term of Caretaking Agreements in Community Title

When the Strata Schemes Management Act was amended in 2003 to limit the term of caretaking agreements in strata complexes to no more than 10 years (including options), similar changes were not made to the Community Titles legislation. Accordingly, agreements between Community Associations and caretakers could still be for terms of 25 years – and often were.

However, this has changed in late 2021 when the Community Land Management Act 2021 (the “New Act”) commenced on 1 December 2021. The New Act is designed to bring the legislation for community title into alignment with, and ensure consistency with, the Strata Schemes Management Act 2015.

Under the New Act, caretakers became known as “Facilities Managers” and are defined in the New Act as any person who assists with one or more of the following functions (except as a volunteer, casual or committee member):
• managing association property.
• controlling use of association property by persons other than owners/occupiers.
• maintaining and repairing association property.

These duties capture all of the traditional roles of an on-site caretaker.

Most importantly, the New Act prescribed that the maximum term of these agreements moving forward was now 10 years.
It also prescribed that:
1. the proposed facilities manager must disclose interests, including connection with the original owner and any pecuniary interest, in the association;
2. NCAT is empowered to make variations to, or terminate facility management agreements in certain circumstances; and
3. if authorised at a general meeting, an existing facility management agreement can be transferred to another entity.

What about Caretaking Agreements Already Existing at the Commencement of the New Act?

Unfortunately, the New Act did not grandfather all existing caretaking agreements so they could continue to operate in accordance with the old legislation.

In fact, it provided that a caretaking agreement in force immediately before the commencement of the new legislation is taken to be a facilities manager agreement for the purposes of the New Act and the agreement is deemed to expire 10 years after the commencement of the New Act, i.e. they will terminate by 1 December 2031.

Is there a Loophole in the new legislation?

There is one exception contained in the transitional sections of the New Act that may exempt some existing managers from this harsh new write down of their agreement term.

If the caretaker is entitled to “exclusive possession of a lot or association property in the scheme”, any caretaking agreement in force immediately before the commencement of the New Act is not taken to be a “Facilities Management Agreement” for the purposes of the New Act and therefor the 10 year term limitation does not apply to that agreement.

In other words, the owner of the caretaking business must be the same entity as the owner of the lot where the business operates, or there must have been a lease in place prior to 1 December 2021 that grants to the caretaker exclusive possession of the lot or community property where the business operates.

If you are a caretaker or service provider for a community title it is strongly recommended you seek advice on this issue relevant to your circumstances.

Article Written by Col Myers of Small Myers Hughes Lawyers

Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

Three Things To Do in Response to a Vague Record Copy Request


Here are two-real life examples:

“I request copies of all correspondence from any unit owner to the body corporate requesting for the program of works relating to the water penetration into unit [XYZ] be undertaken and responses.”

“I request a printout of all payments made to any third party in relation to the program of works”

How can the body corporate comply with those requests within seven days (assuming eligibility, form of request, and payment of fee is satisfied).

Must a body corporate comply with every record request?

The answer is, no.

The trick is knowing which requests fall outside a body corporate’s obligation to avoid adverse action being taken by the requester.

Here are some guiding principles to determine whether a body corporate must comply with a copy request:

  • the requester must provide a reasonable degree of specification of the records being requested;
  • a request for a particular class or type of document is usually sufficient;
  • the requested records must be able to be readily identified by the body corporate based on the request;
  • a body corporate is required to perform some search of its records to fulfil a request;
  • a body corporate is not required to read through every document to determine whether it has information being requested;
  • the records must actually exist in order to have an obligation to provide a copy on request.



In the first example above, it is unlikely that an adjudicator would order the body corporate to provide the requested documents because:

  • the document range is limitless;
  • the body corporate would be required to read all correspondence from unit owners to determine whether each correspondence was about the topic of water penetration.

In the second example above:

  • if a document existed that compiled payments made to third parties, then it is likely an adjudicator would order a body corporate to provide a copy of that document; however
  • if the document did not exist, the body corporate would not be required to read the documents and create a summary of payment information contained in those documents.


Three Things

  1. Communicate

Ensure that communication is made to the requester (ie that the request has been received or asking for clarification of the records requested), rather than simply not responding, as we find that tends to escalate matters unnecessarily;

  1. Eligibility

Check that the pre-conditions of a copy record request are satisfied (i.e. Is the requester an ‘interested person’? Is the request in writing? Has the prescribed fee been paid?);

  1. Inspect

If you or your legal representative considers the record request to be non-compliant, contact the requester and direct them to the option of inspecting the records of the body corporate, whether it be themselves or their agent.

Article Written by Brendan Pitman (27 May 2022)

Liability limited by a scheme approved under Professional Standards Legislation

Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.

Internal Emails Between Committee Members – Public or Private?


We are often asked, do emails between committee members form part of the records of a body corporate?

The answer is…it depends (so you need to read on).

Internal communications

This is a critical question because, if they do, those emails may be accessed by an owner or prospective purchaser and there is no restriction on the purpose for which the records may be used.

A committee acts on behalf of a body corporate, and the requirement to keep correspondence is usually understood to refer to correspondence with parties external to the committee.

However, emails between committee members (which includes caretaking service contractors and letting agents as non-voting committee members) may form part of the records of a body corporate depending on:
• the role of the person sending the email at the time in which the email was sent; and
• the subject matter of the email.


Understanding the role of the sender and receiver of an email is part of the process to determining whether that correspondence forms part of the records of a body corporate.

That is because there is no requirement to keep correspondence received or sent between owners, only that correspondence to and from the body corporate (or committee acting on behalf of the body corporate).

Committee members usually have two hats on. One is as a member of the committee representing all owners, and the other is as an owner. It is only those emails sent by or received by a person in the role as a committee member that may caught by the provisions about body corporate records.

Subject matter

Often the role being played by a person (as committee member or as an owner) is not clear but may be inferred by the subject matter of the email.

If the subject matter of the email is about body corporate or committee business, being carrying out the functions under the body corporate legislation, the email is likely to be a record of the body corporate.


Practical examples of internal written communications that would likely form part of body corporate records:
• a committee member advising of their resignation;
• a committee member proposing a vote outside a committee meeting;
• email exchanges between committee members about a maintenance issue at the scheme.

Practical examples of internal written communications that would likely not form part of body corporate records:
• select committee members discussing their personal opinions on a matter to be voted on at an upcoming meeting;
• a committee member seeking personal advice (not on behalf of the body corporate) on a body corporate or other matter.

This is a touchy topic, particularly where committee members wrote an email with sensitive information thinking it was not available to the public. To allay any concerns, a body corporate should seek advice either before or during the seven day turnaround time for a record request.

Article written by Brendan Pitman (5 April 2022)


Liability limited by a scheme approved under Professional Standards Legislation
Disclaimer – This article is provided for information purposes only and should not be regarded as legal advice.