First, some general rules for BCMs
There are many rules concerning body corporate managers (BCM). They are found in both the Body Corporate and Community Management Act 1997 and the several Regulation Modules. Finding them, unravelling them, then sorting them into some semblance of order is not for the faint-hearted – but most are ‘bread and butter’ rules which would be known and understood by the people directly affected by them, i.e. the BCMs.
- A person is a BCM if engaged to supply administrative services to the body corporate.
(A statutory definition of ‘administrative services’ is not included in the BCCM legislation.)
- A BCM may be engaged only if the body corporate – not the committee – passes an ordinary resolution in general meeting, i.e . it is a restricted issue.
- Proxies are not allowed.
- Only an owner or the committee – not the BCM – may submit the motion to the body corporate.
- If the proposed expenditure exceeds the relevant major spending limit, the motion must be in the form of a motion with alternatives, i.e. with at least 2 quotes.
- Materials forwarded to the owners for consideration at the general meeting must include the terms of engagement including start and end dates, renewals and extensions etc.
- Once the motion is approved, the contract must be in writing and state the term of the engagement including start and end dates, renewals and extensions etc, functions of the BCM, and basis of working out the fees.
- The BCM is bound by the relevant Code of Conduct which is automatically included in the BCM’s contract, even if the contract does not expressly say so.
- Minimum term? There is no minimum term.
- Maximum term? Not longer than 3 years, no matter what the contract says.
This brings us to a new development – the ‘Hotel California’ Renewal Clause
The UOAQ was recently approached by a member of our Association seeking support about a renewal provision in a 3-year agreement between the member’s body corporate and Complete Body Corporate Services (Complete) on the Gold Cost.
The relevant provision, which forms part of Clause 11. Termination is:
“Should the Body Corporate not renew this Agreement prior to one year before the Expiry Date, the Company’s appointment shall continue for a further term commencing at the Expiry Date on the prevailing terms and condition…”
It appears that the body corporate is faced with a Hobson’s Choice – either the body corporate renews the agreement sometime before the end of the second year of the 3-year term or the agreement will renew itself automatically for another 3-year term. There seems no avenue for the body corporate to allow the agreement to run its course and expire at the end of the 3-year term.
♪ ♪ ♪‘ “Relax,” said the night man, “We are programmed to receive,
You can check out any time you like, But you can never leave!”
Welcome to the Hotel California, Such a lovely place (such a lovely place)…. ♪ ♪ ♪
There is a clear contrast with the so-called ’90-day roll-over’ provision included in most lift maintenance contracts; the lift contract may renew for another term unless the body corporate advises at least 90 days before the expiry date that they do not wish to renew the contract. There, the body corporate has the right to prevent a renewal if they do so at least 90 days before the end-date.
Complete’s ‘Hotel California’ Renewal Clause take this to another plane all together – either the body corporate renews for another 3-year term , or the agreement renews itself. This clause is inconsistent with the BCCM corporate legislation which clearly limits BCM’s engagements to a maximum term of 3 years.
In our opinion, the clause is devoid of both logic and merit – and it is presumptively invalid.
The UOAQ wrote to Complete about our concerns late-2018 but have received no response.
The UOAQ considered referring these concerns to Strata Community Australia (SCA) – the peak representative body for BCMs – but it is understood that Complete is not a member of SCA.
We have two recommendations for all members:
- If Complete is your BCM, check your contract and if necessary talk to their Principal, Ms. Kim Elliott;
- Always read the whole contract before signing it and if necessary seek professional advice.