Question: Can our committee, as a corporate decision, terminate our body corporate manager?
Our committee has sent an email to our body corporate manager requesting to terminate the management agreement based on a ‘commercial decision’.
The body corporate manager was appointed by a majority of owners at the last AGM. Is termination possible?
Answer: It is concerning that the committee are looking to override the authority of the body corporate.
The Committee can’t unilaterally decide to end the contract.
However, there is some leeway for them to discuss the contract with the body corporate managers and perhaps negotiate an exit that could be voted on by owners.
In this case, you state that the committee have requested the current managers take action to end the contract. The managers could do this by terminating the contract themselves – they will probably have a termination clause in the contract that allows them to do this within a specified period of days – and in that case, the body corporate would have no say over the matter. The agreement could also be ended by mutual termination. Still, in that instance, the committee would need authority for this action from the body corporate via an ordinary resolution on a motion at a general meeting.
However, all of this depends on the manager’s agreeing to end the contract, which is not something that happens too often. Here, you say that the request has been made based on a ‘commercial decision’, but that decision is presumably one by the committee in what they see as the interests of the body corporate. It is hard to see the managing agency agree to this, as giving up business is probably not in their commercial interests. Most likely they would point out, as you have done, that a majority of owners appointed them, and they will serve in their capacity until a majority votes them out.
At a wider level, I think you are right to raise some concerns about the committee taking this action – even if they are unsuccessful, it is concerning that they are looking to override the authority of the body corporate. Perhaps there is a good reason for this, but if so, they should communicate with the body corporate why and what they want to do. As an owner, you might look to table a letter of complaint at the next committee meeting or file an owner’s motion. If the matter is serious enough, you may need to consider if the committee needs to be replaced – or at least needs some fresh representatives.
William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924
Yes, and to some extent what you describe is common practice. If a committee thinks a management rights holder is not performing their duties as per the contract they will often engage a specialist third party to review the agreement and performance of the rights holder. The costs of this engagement are usually within the committee spending limit and it may be reasonable for the committee not to advise owners they are taking this step. If any report into the rights holders performance finds they are performing below standard then there are various strategies open to the committee but providing a breach notice as a follow up is a reasonable course of action.
Can a committee, engage a company to review the Management company and issue a Breach then inform owners of such or should the owners be consulted prior to initial action. The Management company is a large one and I do not see most owners unhappy.
Yes, and to some extent what you describe is common practice. If a committee thinks a management rights holder is not performing their duties as per the contract they will often engage a specialist third party to review the agreement and performance of the rights holder. The costs of this engagement are usually within the committee spending limit and it may be reasonable for the committee not to advise owners they are taking this step. If any report into the rights holders performance finds they are performing below standard then there are various strategies open to the committee but providing a breach notice as a follow up is a reasonable course of action.